Brian Tomlinson: A Food Label for Corporations

How can I decide that a business is one I want to deal with? One that I trust to do the right thing by its employees and suppliers? That understands its role in society? That makes practical efforts to reduce its impact on the environment?
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I read food labels. I want to make sure I'm not eating high fructose corn syrup in products that shouldn't in any reasonable world contain it. I want to make sure I'm buying sustainably caught fish - putting anything back that doesn't have the Marine Stewardship Council blue lozenge.

I feel better making these food choices. If lots of people make these choices, patterns of supply might just change too. The world gets a little healthier and a little more sustainable.

With food, I can read a label that tells me something. In the UK, food labels are standardized. Crucially, this provides comparable information. Per 100g I know how much sugar, how many carbs, how much fat and how much of that is saturated. I can then compare that against other products if I want. It helps me choose; matching my values and my goals to my buying behaviour.

But, what are the labels for a corporation? How can I decide that a business is one I want to deal with? One that I trust to do the right thing by its employees and suppliers? That understands its role in society? That makes practical efforts to reduce its impact on the environment?

In a meaningful sense those labels don't exist. They certainly don't exist in a manner that can be used by the averagely informed consumer. What can I find out about a common consumer item? Perhaps where it was made - though that doesn't tell us much. We might learn the names of the product's core ingredients and the corporation that made it, but not much else to supplement the basic economic information of price and brand association.

That's a thin basis for deciding anything. The consumer needs information that is comparable across companies to enable us to bring our whole selves into our buying behaviour - rather than just our money.

There is information out there, but much of it is misleading or unhelpful. In our current environment, corporate information directed at the consumer is often either just marketing or noise. A corporation's own self certified labels should be taken with a pinch of salt. Sustainability information on a product produced by a Unilever company might mark a genuine corporate commitment to sustainable business practices; it's CEO is genuinely committed and it's achievements in the past year are notable. But without comparability, what do they tell us?

We know that an oil company whose adverts talk only of their investment in solar isn't telling us the full story. Classic Greenwash - the corporate mistake of talking about how they spend a tiny amount of the money they make rather than how they make their money.

A legion of corporate brands and logos suggestive of sustainable practices confuses more than it illumines. It also undersells the business benefits of sustainable practices - which are huge and increasingly quantifiable. Corporations operating positive environmental, social and governance practices have cheaper debt and equity and a better share price. There's a big business case for getting comparable information to the public in usable form.

The consumer needs simple, easily displayed, comparable corporate information across a range of measures. The choice of which measures to include is a fraught and political one.

But for starters, how about: carbon emitted per dollar of revenue; executive to lowest paid wage ratio or percentage of workers earning minimum wage; spending on worker training as a % of revenue. Should I know how much tax a company paid compared to in-country revenue? Should I know how much their employees claim in "in work" benefits? Shouldn't we know all this or at least have an easy way of finding out? What's most relevant would depend on the sector in which a corporation operates but information of this sort should be offered up to the consumer. It should be our right.

Financial information is generic and comparable; across companies and sectors it can be applied to corporations big and small. Non-financial information is harder but it is possible. Corporations have access to much of this information already. Firms such as SAP and Natura have lead the way in developing Integrated Reporting; combining reporting on a firm's traditional accounting performance with its non-financial performance across environmental, social and governance issues. A vital emerging tool for measuring real-world corporate performance.

We need to enable Integrated Reporting across all businesses, and then translate it for the consumer: to the person who is buying the product or using the service. Is it hard to do? Of course. But traditional accounting practice took generations to evolve. We should identify a revolution in standardized consumer information as a practical goal and work towards it. Not just any information - the right information. The kind of information that causes companies to change their behaviour. The kind of information that creates the incentives - around demand and price - that change the world.


Brian Tomlinson is the Managing Director of the Coalition for Inclusive Capitalism

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