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Sustainable and Ethical Operations


Animal welfare illustrates the complexity of wanting to do right.

The American commercial landscape has evolved to the degree that success depends as much on the manner in which goods and services are delivered as on the goods and services themselves.

Values such as “sustainability” and “ethics” are part of any progressive company’s business proposition. If history is any guide, many company policies being shaped today could become industry regulations down the road. While we in the 21st century may complain of overwork, the six-day workweek was standard in the 19th century.

The Ethisphere Institute, a New York-based international best practices and thought leadership organization, has honored the World’s Most Ethical Companies since 2006. Ethisphere’s executive director, Alex Brigham, told Forbes magazine, “Companies find that ethical business practices increase their competitiveness in their respective industries, helping to further substantiate the notion that a culture of ethics is crucial to sustainable excellence.”

Among those honored by Ethisphere in 2013 were retailers Whole Foods Market, Safeway and Target. These companies recognize that contributing to the greater good can also be good for the bottom line. But championing change isn’t without its challenges — take the cause of sow gestation crates, an emotionally weighty issue and current hot button in the grocery retail industry.

Many agree that consumers are a key catalyst in the shift away from gestation crates, but there are several factors in play.

“There’s an overarching consumer awareness and desire to be engaged and knowledgeable about how food is being produced,” says David Fikes, VP of communications and consumer affairs at the Arlington, Va.-based Food Marketing Institute (FMI). “It’s holding true in all sustainability practices. I would say it’s a driving interest in making sure the retailers they frequent are reflecting and sharing their values, including economic, social and environmental concerns. Consumers are interested in the mission of retail companies.”

“Increasingly, guests are asking more of us,” says Amanda Irish, senior director, own brand food at Minneapolis-based Target. “They want to know more about where their food comes from and how it is grown and produced. We’re excited about the opportunity to continually engage in this dialogue so they can feel even better about the grocery options they have at Target.”

Dialogue aside, farm animal welfare is complicated. “It’s a complex issue, to say the least,” says Brian Dowling, Safeway’s director of public affairs. For many years, Pleasanton, Calif.-based Safeway has had an animal welfare committee that works with industry experts, including notable animal scientist Temple Grandin; the company also gives careful consideration to the voice of its customers. Safeway announced in 2008 that it would be taking steps to move away from suppliers that use gestation crates.

“We believe we’ve taken a leadership role in cage-free eggs, gestation crates and controlled-atmosphere stunning [of poultry],” says Dowling. But there have been challenges. “It’s been difficult finding supply sources, because this is not happening overnight. … There are suppliers out there adapting their systems to group housing, but others haven’t.”

Safeway said in late 2013 that its Eastern Division fresh pork supply comes exclusively from group-housed pork suppliers. The company has plans to add another operating division in 2014.

Group housing or group pen, along with stalls and free-range, constitute sow housing, but according to the Schaumburg, Ill.-based American Veterinary Medical Association, each has benefits and drawbacks. There’s no clear scientific consensus as to which is superior ( “The industry wants to address the emotional needs of the consumer, but we also have to make sure it’s scientifically verifiable and economically viable,” says FMI’s Fikes. “We have to make decisions to support our values, but if it’s not economically viable, are we willing to pay the price?”

Applauding Progress

The Humane Society of the United States (HSUS) looks for areas where its interests in animal welfare overlap with companies’ interests of selling safe, affordable, quality product, says Matthew Prescott, food policy director for Washington, D.C.-based HSUS. “We found tremendous success in that overlap because there’s a good business reason.

“We know clearly that people care about these issues,” says Prescott, citing studies by the American Farm Bureau Federation and Technomic that demonstrate consumer concern for animal welfare. “The gap that we see is what people want and what happens to animals. The HSUS goal is to narrow that gap and help food companies be proactive on this issue.”

HSUS has been working on gestation crates for about 12 years, says Prescott. Initially, “there wasn’t a whole lot of interest. Many companies had just started looking at social and environmental issues.” But as time went on, more companies saw value and thought it mattered to customers, he says.

HSUS posts food company activity on its website. Currently more than 60 companies in the food and grocery retail space have policies to eliminate gestation crates ( Prescott says that it’s a win just to get companies to commit to making a change in favor of animal welfare. The heavier lifting is helping them implement change, including acting as a resource and helping secure suppliers, he says.

Companies are committed to progress, but because implementation takes considerable capital investment and time, it’s not surprising that many speak of compliance dates such as 2022. But companies do want customers to know of progress being made. Some companies, including Target ( and Safeway (, have websites dedicated to their sustainability efforts. Companies also promote their efforts on package. Target’s Simply Balanced line, for example, includes cage-free eggs that are American Humane Certified. Safeway’s Open Nature brand eggs also include “cage-free” messaging on pack.

Accelerated Change

In the ethics space, many issues are vying for corporate and consumer attention, including other animal welfare issues, GMOs, organics, food additives, labeling, sugar and fats, says Dave Donnan, a partner with Chicago-based A.T. Kearney, which works with CPG and retailer clients on their total supply chain, from specifications to sourcing and procurement. “There are many conversations going on. You can’t address all of them [at the same time]. You have to address the ones most relevant to customers and ensure they’re getting safe and healthy products.”

But Donnan points out that consumers are able to acquire information quickly, and social media provides increasing avenues — including video — for sharing information, which will surely increase the pressure on food companies and retailers.

The Agriculture and Applied Economics Association (AAEA), based in Milwaukee, recognizes that the farm animal welfare issue “is one of ethics — public ethics. The choice of how animals are raised affects not just the consumer, but reflects the social norms of everyone.” The AAEA argues that the animal welfare debate will likely take place in voting booths. What it’s not considering is the economic vote of investors. Consumers and investors vote with their dollars. Consumers can still engage with retailers at the local level, but social media means they’re communicating at a more vocal level.

All players in this space want to do right, but the increasing engagement of consumers, with plenty of support from media and NGOs, means that change will accelerate.

But that’s just part of sustainable growth, as Donnan observes: “Industries want to change, but it’s not because what they’re doing is wrong.”

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