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Introduction
To be socially responsible, organizations must deliver value for investors and society. Yet despite the growth in corporate social responsibility (CSR), many major challenges such as tropical deforestation and climate change are greater today than when the CSR movement began accelerating in the 1990s.
The problem is that unexpected side effects can confound seemingly good deeds. Decision-makers need tools that help them understand the complete ramifications of their choices. Socially responsible efforts must integrate our knowledge about complex topics. “There are so many unintended consequences of well-intentioned actions. It feels like a game you can’t win […] Every day the world gets a little more complicated and being a good person gets a little harder (The Good Place, Season 3, Episode 10).”
This post has been co-authored with Dr. Steven Greenspan, who is a cognitive psychologist and an innovator in Information and Communications Technology (ICT), with over 75 US patents. He is the co-author of Automation and Collaborative Robotics: A Guide to the Future of Work.
The authors of this post are collaborating on the development of a tool, focused on food health and sustainability, aimed at assisting executives to understand the complexity of their choices. Leaders face two core challenges: incorporating the perspectives of people with unique knowledge and understanding the complex web of causal factors that impact outcomes. Consider this scenario:
Ming, the wife of co-author Rod Wallace, grew up on the island of Borneo. At age five, Ming saw a bulldozer tear up the virgin rainforest to make room for a palm tree plantation. Like many young children, Ming’s immediate response was awe of the tractor driver’s impact on the world. Ming did not make a cinematic, childhood vow to protect the earth as we might expect. No, little Ming was tired of eating papaya and fearful of the wild monkeys that stole schoolbooks. The change wrought by the tractor was exciting and full of promise. It turns out Ming’s sentiments were echoed in the hearts of many Bornean adults as well, who yearned for economic development. To understand the social dynamics at play, we must forsake our acquired notions of good and bad as they relate to socially responsible actions.
When businesses face decisions, such misunderstandings about our interconnected world can lead to destructive outcomes. Globally, we wrestle with a new generation of confusion about Ming’s island home and the palm fruit grown there. Many residents of wealthy countries denounce the deforestation undertaken to plant palm trees and dislike the elevated saturated fat in the resulting palm oil. Numerous organizations thus assume their effort to ban the sale of palm oil in developed countries will better society.
However, there are unintended, negative consequences of banning palm oil in western markets. In palm-growing regions like Borneo, such decisions undermine the economic progress that Ming searched for as a child and may thwart environmental goals. It may also undermine developed-nation health.
Food producers focus on three areas for success:
- This is the recipe that determines the attractiveness of the food—its taste, stability, and producibility.
- Ingredient Cost. This influences the producer’s profit and final price.
- Social Impact. These are the consequences of production on health, environment, and communities.
Food innovators must deliver success in all three dimensions—and oil blends including palm are often critical. Palm oil’s unique chemistry makes it key for maintaining taste and producibility: it delivers crispiness in baked goods, is stable when fried, and more. Palm oil is affordable, with a price considerably below most oils (currently one-third less than liquid oils). And palm is not excessively high in unhealthy saturated fats, as widely believed. One recent study found that “Palm oil does not have an incremental risk for cardiovascular disease.” Moreover, palm provides beneficial vitamin E through its micronutrients.
Without palm oil, a bouillon cube is likely to be formulated with higher saturated fat alternatives to deliver the most attractively shaped fat bubbles. In short, remove palm oil from a chef’s palette, and some foods become less healthy in order to make them palatable. And what about the environment?
The counterintuitive reality is that banning palm oil in developed countries would likely increase environmental devastation. The economic, cultural, and government structures that sustain the annual destruction of 1.3 million hectares of Borneo rainforest have developed over centuries. Such destructive social patterns are difficult to untangle.
Reducing palm oil sales to developed countries saps the highest-impact efforts to shift Borneo farmers to more sustainable practices. More than 4,000 business and non-profit organizations partner in the Roundtable on Sustainable Palm Oil (RSPO). Members commit to produce, source, and use palm oil certified as sustainable by the RSPO. These organizations want to protect the environment and wildlife while supporting local communities. And the desire for developed-nation dollars sustains the RSPO initiative. Take those dollars away and their efforts founder.
But the most sobering realization is that eliminating palm oil demand in developed countries is unlikely to reduce global palm oil sales. Since it is so much cheaper than other vegetable oils, palm oil unsold in developed countries will sell in developing countries that care less about the forest. Close your eyes to the carnage and the orangutan still dies.
What are the lessons?
Decision-makers must understand the potential downside of socially responsible “knee-jerk” reactions, such as banning palm oil solely because it is associated with destructive actions. In the case of palm oil, leaders must focus on options that enhance social welfare, such as supporting sustainable palm oil sales, paired with impactful efforts to improve food health. Other options may prove attractive, such as ensuring that Malaysian and Indonesian institutions tasked with Borneo preservation are effective, and developing new technologies that deliver healthy oil-based foods without palm oil.
The Bigger Picture
We need tools, insights, and strategies that reduce unintended consequences. The interconnected nature of decisions must be transparent so reactions can be better anticipated. The not-for-profit organization CDP, for example, develops metrics that help investors, companies, and cities take action to build a sustainable economy by increasing understanding of environmental impact. With CDP measures, organizations unlock traditional business benefits, such as enhanced brand value and access to capital. According to CDP’s Morgan Gillespy, Unilever’s effort to transform its palm oil supply chain added $195 in investor value, and Chinese food companies may soon find participation in measurable palm oil sustainability efforts critical to retaining global sales.
The authors are also collaborating to develop a tool to support interconnected insights: a causal map of the economic, social, and biological systems impacting food. Our initial undertaking is focused on fats and oils. This map of the influences of different geographical, biological, psychological and social factors on food production, consumption, and healthfulness will help decision-makers identify critical leverage points for influencing nutritional security and well-being. Our framework and methodology are inspired by the work of the Intergovernmental Panel on Climate Change (IPCC), who shared the 2007 Nobel Peace Prize for their analysis of the causes and impact of climate change. One of the senior members of the IPCC panel who shared the award, economist Gary Yohe helped design our methodology and endorses the effort, explaining, “Integrating our knowledge about a complex topic helps us to develop deeper insight.”
Early research by the authors has uncovered multiple high-impact failures that exist because decision-makers in one area of the food system misunderstand how other aspects operate. The hope is that improved insight can help deliver greater value for everyone. Across our interconnected society, we suffer from such misunderstandings. In fact, in a recent post, co-author Rod Wallace describes how more than 60% of the American economy is dedicated to industries failing to deliver the most fundamental needs they’re meant to address. For instance:
- Food doesn’t nourish us as it should, and the obesity epidemic is global.
- Americans spend vast sums on healthcare yet have the shortest life expectancy in the developed world.
- Despite large increases in education spending, huge portions of American graduates cannot understand a simple table or make a cohesive argument.
Participants in each of these industries strive to enhance the value delivered, to benefit themselves and their investors. And fixing such fundamental failures would massively enhance value creation.
Neither business investors nor society receive the value of unmet needs. Wallace’s book sketches how socially responsible “knee-jerk” reactions similar to banning palm oil cause many of these failures. Seemingly constructive decisions lead to unintended bad outcomes. Understanding the interrelated layers behind the problems we aim to solve will help curb these negative outcomes and maximize value. We may have more seemingly irresponsible behavior, but outcomes will improve.
As we wrestle with the challenging social and environmental problems that surround us, let’s not settle for stereotypes and superficial analysis. Let’s embrace the complexity—and develop insights, tools, and strategies to improve our interconnected world. Such decision-making support can help fix failures and address our most fundamental needs.
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Hello, I am Qurratu from the Master In Public Notarial Program, Islamic University of Indonesia.
I am interested in environmental issues in this article.
The prohibition of palm oil reminds me of the implementation of CSR programs which still implement black CSR.
It seems good because it grows the economy in the surrounding community, but it is contradictory and contributes negatively to community empowerment.
The iceberg phenomenon, which is the real problem far more complex when evaluated from all sides.
As far as I’m concerned, the solution is to conduct deliberations to find the right balance on each side.
In Indonesia, the newly enacted Work Creation Act was immediately rejected by the people.
For instance, a provision regarding the requirement for an EIA for the proposed development project. There is no more involvement of; environmental advocates, affected communities, and any person affected by a decision made in the EIA process. However, only the communities directly affected by the project are involved (of course, orangutans are not included either). What an interesting that every decision made by Parliament has a hidden interest.
Aditya Candra Pratama Sutikno, Indonesia Islamic University, Law graduate student.
If the palm oil industry becomes the personification of the evidence on economic growth and the benefits of this palm oil on food. It can make food appeal, taste stability, productivity, and ingredient costs affect producer profits and the final price. It’s like ming’s view of how fun it is from the bulldozers tearing through the forest.
In my opinion, If the development of the palm oil industry is a form of economic growth, many negative things will happen. In my opinion, there are several considerations, when viewed from Indonesia and for the word, we must pay more attention to such as :
1. As law no 39 years 2009 concerning health which regulates environmental health, for example, stated in article 162, namely that environmental health efforts are aimed at realizing a healthy environmental quality, bet it physical, chemical, biological, or social which enables everyone to achieve a healthy degree of health. As high as possible.
2. In his book “Marhaeni Ria, entitled environmental law & implementation of sustainable development in Indonesia” equipped with law no. 32 of 2009 concerning environmental protection and management. Quoted from pp. 3-4. That ecosystems and the environment, living organisms (biotic) and the non-living environment (abiotic) are closely related and influence each other. The ecosystem is the basic functional unit in ecology because it includes both biotic organisms and the abiotic environment that influence each other. All living things on earth cannot exist alone without depending on other living things and their environment as well as humans, cannot live alone without other living things without a biotic and abiotic environment.
4. Articles 22 and 25 in the universal declaration of human rights explain that social security is not only an economic right, but also social and cultural rights and everyone has the right to live an adequate life or the health and welfare of himself and his environment.
4. If the oil palm industry becomes the main sector of economic growth in sustainable development, it must be reconsidered, because in Indonesia there have been cases of corruption related to oil palm companies, not just one or two cases have occurred. I take an example that happened in east Kalimantan, quoted from (Abba Gabrillin Kompas.com). That the regent was proven to have received 6 million bribes from the president director of the PT. Golden Prima Oil is given in relation to the granting of permits for oil palm plantations.