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King Bono anyone?

Apr 262011

This week as Prince William takes his place on the altar of Westminster Abbey, he might spare a thought for how the the next time he walks up that aisle, it will be to receive the British crown - when he will simultaneously become one of the country’s highest net worth individuals and tax exempt. Across the pond, the closest Irish equivalent, it seems, might be U2 frontman, Bono.

I was surprised to read this week that Bono was being drafted in (at enormous cost ) to write a song that Broadway producers hope might save the failing musical - Spiderman. Shame, I thought that Bono isn’t willing to contribute something similar to help sort out the failing economy/tragedy - Ireland.

You see, a bit like the British monarch, Bono doesn’t pay any taxes. For many years all artists in Ireland were exempt from income tax. Then a few years ago, the law changed. Under the new regime only the first €250,000 of artist earnings are exempt (which still covers most Irish artists), but thereafter they must pay taxes like everyone else. But not Bono.

For Bono and the other members of U2, who paid themselves €21 million in wages last year, the Irish exchequer still receives not a cent.

Because Bono has “gone Dutch”. By which I don’t mean he’s agreed to pay half, but that he’s agreed to pay precisely nothing. No sooner had Ireland announced the change than U2 moved their tax residency to Holland whose government still guarantees artists a 100% tax free income.

Now is there anything wrong with being ‘tax efficient”? I’d say it depends on where you stand morally and ethically with respect to social responsibility and social justice. If these things aren’t important to you, then off you go - go knock yourself out in Amsterdam or the Bahamas or whatever other tax exile you chose.

But when you’re the same guy who last week lobbied the Irish government to ‘do more’ to honour its debt relief commitments to Africa, then I have to take a rather different view.

I don’t care if your name is King WIll or King Bono, whether your business is holding sooper dooper weddings or writing songs about superheroes, until you pay taxes, then leave the decisions about where our money gets spent to those whose money it is.

Apple and a new Asian paradigm...

Apple, China, Electronics Leave A Comment »

Apr 212011

This week I heard a presentation at the Royal Society of Arts by Constraining Consumption author Chandran Nair. What we do in the West over the next 40 years doesn’t really matter, argues Nair, because by 2050 there’ll be 5.5 billion Asians and only 750,ooo Westerners. It’s a pure numbers game and thus the “planet’s future will be determined by what happens in Asia”.

In Nair’s dystopian vision of the future, Asian governments will have to become even more totalitarian so as to impose the draconian measures necessary to prevent their populations from consuming as we do in the West. Imagine if 3 billion people in China and India all wanted to buy a car, there just aren’t enough resources available to make them. So, it’s totalitarian rule or total bust? Helluva choice isn’t it?

What it means is that Asia must find another way forward i.e. not the Western way. Not only must it constrain consumption but it must also create employment at all costs. Factories will have to remain labour intensive and not be drawn into introducing machines to do the work. Imagine, if you will, a permanent state of Industrial Revolution.

Which brings me to two recent publications from Apple.

First the good news. Apple’s quarterly financial reports for 2011 show revenues up by 83% as the number of iPhones sold has more than doubled from a year ago. All together now - “Woo hoo!”

Second the even better news. Apple’s Supplier Responsibility report for Q1 2011 shows that Apple are working hard with the Asian suppliers of those same iPhones to ensure that they ‘provide safe working conditions [and] treat workers with dignity and respect.” You’ve got to just love those guys at Apple, don’t you?

Get into the detail of the second report and you’ll see that in particular, they’ve turned their attention to the infamous Foxconn factory in China where tragically, 16 young men and women took their own lives over one month in May 2010. Every one of them jumped to their deaths from a factory or dormitory window.

So what exactly are the world’s most profitable company doing to solve this awful problem in their supply chain? Well the report tells us - Apple are working with Foxconn on ‘several fronts’ but first and foremost they are ‘attaching large nets to the factory buildings to prevent impulsive suicides’.

Yes that’s right. The dignified and respectful solution to your impulsive suicide attempt is to be caught in a large net in full view of your co-workers. After which, you’ll presumably be lowered safely to the ground and encouraged to go kill yourself off the premises - or at least a safe distance from Apple’s reputation.

What the report does not go into is what might be driving these youngsters to such desperate measures in the first place. When I interviewed Foxconn workers outside the factory gates in Sept 2010, the answer to that question was clear - working on a production line where you are required to perform the same mindless task up to 10,000 times per day, every day, 7 days a week DOES YOUR HEAD IN! Eventually 16 young Chinese workers just couldn’t take it any more and literally ran for the nearest exit. Many more told me that it had crossed their minds more than once.

Chandran Nair told the assembled crowd this week that he was surprised how well his work had been received by the wider business community. I’m not. This is exactly the kind of intellectual ammunition that Asian leaders and businessmen (like Foxconn’s Terry Gou) lap up to justify maintaining a twin track path to economic development. Now they can continue to add to their untold personal wealth and at the same time argue that it’s in the planet’s best interests. Because if you buy into Nair’s argument, then you accept as inevitable the need to continue to exploit a labour intensive workforce in Asia as Apple/Foxconn does.

It is not right that what we do in the West, has or will have no bearing. As long as an Asian workforce is making products for Western consumption, then we in the West have a responsibility to support their demands for as much freedom as we enjoy and that should include working in a factory without need for nets.

Following the Sugar Trail...

British, Sugar Leave A Comment »

Apr 182011

A couple of miles outside Royston in Cambridgeshire and halfway up the big hill on the A505, there’s an old dilapidated pub. It’s a long time since the The Horse and Groom served any customers but recently planning permission was granted to turn in it into a swanky new two-storey restaurant. No doubt the new menu will boast of having top quality locally sourced produce and they don’t have to look very far for it when they do. Directly opposite is the entrance to Thrift Farm, 3500 acres of sprawling farmland that falls into four counties Hertfordshire, Cambridgeshire, Bedfordshire and Essex. The farm is owned by Robert Law.

Robert is a rare thing these days, a first generation farmer. Having grown up the son of a lawyer in Newmarket, he spent his school summers working for a local farmer, “I got the farming bug.” He tells me as we bump along in big 4×4 toward the other side of his vast farm, where the sugar beet grows.

Robert is a giant of a man standing well over 6 foot and looks as strong as an ox, but underneath he’s clearly got a soft streak. He is pointing to a newly planted copse that he put down himself a couple of years ago. “In the 1950’s they’d have got a good subsidy for pulling out woodland to plant new crops but I’ve been putting new trees in.” Robert wants something to remain on this land long after he’s gone and he hopes these trees will be his legacy to the land. “And it’s great for the wildlife too.” He grins.

We pull up and hop out into a vast 30 acre field that stretches out down and back up the hill in the distance. The field is planted with thousands of neat rows of knee high sugar beet that looks to me a lot like rhubarb. Around the top of the field is an acre-wide strip of linseed, oats, millet and sawgum. These have been sewn purely for birds to eat. Robert gets money from the EU to do it but he says he’d do it anyway. “Maybe I’m different because I’m not from farming stock, but the wildlife is an important part of life round here.”

Robert is explaining to me how sugar beet in particular, is a good crop for the birds because after it is harvested in the autumn, he leaves the stubble in the ground so the birds can eke a meal out of it throughout the difficult winter. Further north in Norfolk the beet fields are the main habitat of the pink footed goose. Robert has even recently been advocating the importance of sugar beet in the UK to the RSPB. With over 1milion members, the RSPB is one of the biggest activist groups in the UK and Robert feels that it is important they get behind the sugar farmers.

Sugar beet was originally introduced to the UK after WWII. During the war, the UK had run out of vital sugar supplies as German U-boats sunk trading ships carrying sugar cane and so the post war government invested heavily in convincing British farmers to grow sugar beet for processing at several newly built sugar mills. The aim was to ensure that we never found ourselves in a position of dependency again. By 1970, we had eighteen sugar processing mills in UK. Now there are only four.

The EU made an important decision to reform its policy on sugar subsidies in 2005. The two largest sugar producing countries in Europe, France and Germany were pulled up by the WTO for producing more sugar than they needed and then dumping the surplus onto the world market, thereby devastating sugar markets that many Third World countries depended on for selling their own sugar surpluses.

The choice the EU faced was to either scale back subsidies just enough to protect the farmers but prevent the dumping of surpluses or go the whole hog to remove subsidies altogether and create a level playing field between producers in Europe and the rest of the world. Many pro-fair trade campaigns such as Oxfam’s Make Trade Fair advocated this bolder move.

“The problem was that they hadn’t thought it through.” Robert explains to me. “If we opened up the market like that then Brazil would completely dominate. No one in Europe could compete with them on price but neither would most of the other Less Developed Countries that currently produce sugar.” The result could have been a complete disaster for the Brazilian rainforest. If Brazil was given unfettered access to the world’s sugar market place then, who knows how much rainforest could be cleared of trees to create sugar cane fields?

The EU went for the compromise solution. European subsidies have been reduced to prevent the dumpling of cheap sugar onto the world market but maintained enough to ensure to preserve the British sugar industry. For now the pink footed goose and Robert are safe. “People are very fickle.” Says Robert. “It may all be Fairtrade now but it wasn’t long ago that it was all food miles.” He’s right. The ethical consumer must of course be aware of the carbon footprint of what they buy too and Robert’s sugar beet has a footprint of only 120 miles. Compare that to the average tonne of sugar cane sold in the UK with a carbon footprint 15,000 miles long and you have to ask yourself again; which is more ethical? These two choices are mutually exclusive and we as consumers must chose between them.

In fact, Tate & Lyle cane sugar imported from Belize has a very low carbon footprint because so much of the rest of the cane plant not used to make sugar is recycled as fuel and there may very well be no conflict between choosing to support developing world farmers and seeking to minimise your carbon footprint. But then British Sugar make a convincing case for being just as ethical. For example, most of the CO2 and heat that comes from their Wissington processing plant is recycled back into a huge eco-friendly nursery that produces over 80 million tomatoes annually and supports a population of 5000 bumblebees. Ask the bumblebees which sugar they would rather you bought and I’m sure they’ll have a thing or two to say about it.

There is no clear measurement of whether sugar beet or sugar cane has the greatest environmental impact because the clever ways in which all these by-products are recycled is so complex. Yet standing in Robert’s field, I can see the benefits of buying British sugar right there front of me. I can see the birds in the field harvesting the oats and linseed that he has planted for them and I can see the hedgerows and paths that Robert maintains around his farm. I know at least that this 3,500 acres of Great British Countryside is safe under his stewardship and I can feel confident that that will continue as long as Robert is here. I also know that the sugar here could be produced locally and by the time the new owners of the Horse and Groom are ready for opening night, there could be a chocolate pudding on the menu full of Robert’s sugar.

Ethical Dilemmas: Fairtrade or Local?

Cadbury's, Ethical Selling, Fairtrade 1 Response »

Apr 132011

At the launch of Cadbury’s FAIRTRADE Dairy Milk bar in Birmingham last year, I came face to face with an interesting ethical dilemma. Fairtrade or Local? It’s not necessarily a choice you might have thought you’d ever have to make, but you’d be wrong.

While Cadbury’s were trumpeting the benefits to Ghanain cocoa farmers of their ‘ethical switch’ little attention was being given to the other vital ingredient in their flagship bar – sugar. To ensure that Dairy Milk could be labelled 100% Fairtrade, Cadbury’s also had to commit to sourcing all the sugar in it according to Fairtrade principles and so a decision had been made to get it from a Fairtrade source in Belize.

The sugar market in the UK is a market of two halves. Half of our sugar is imported exclusively by Tate and Lyle from Less Developed Countries that were once part of the Commonwealth such as Mauritius and Belize. This sugar comes in by ship and is refined at Tate and Lyle’s refinery on the Thames in East London, one of the world’s largest refineries. No doubt. Tate and Lyle were over the moon about winning a contract as big as Cadbury’s Dairy Milk.

But business is a world of competition, of winners and losers, wherever there is a contract won there is usually a contract lost. At first I thought that Belize’s gain must surely be some poor Third World’s country’s loss. Somewhere in Swaziland or Zambia, I imagined a farmer was receiving the bad news that his sugar wasn’t ‘fair enough’ and so Cadbury’s were taking their business elsewhere. I wondered where exactly this poor soul might be but I was surprised to discover that previously Cadbury’s sugar for their Dairy Milk bars had been sourced from “Somewhere in East Anglia.”

Now Jade Goody famously thought that ‘East Angular’ was a foreign country but for the rest of us it’s still a part of Britain. Just down the road in fact from Birmingham where the Cadbury factory is. I’d say you could probably drive your processed sugar beet from Norfolk to Birmingham along the A14 in around three hours.

This is where the other half of our sugar comes from. British Sugar is responsible for the production of the other million tonnes of sugar we consume every year. They refine sugar grown by around 4000 farmers located all over East Anglia and the East Midlands. The total value of these contracts is worth over £200 million to British farmers.

The move from British sugar beet to Belize sugar cane wasn’t in the press pack at Cadbury’s. I felt as though I’d discovered a dirty little secret that I wasn’t supposed to and was suddenly confused. I’m supposed to buy British because I’m supposed to cut down my carbon footprint and the sugar industry in Britain needs support as a world leader in the development of sustainable bio-fuels not to mention the stewardship of the Great British countryside. But then don’t the farmers in Belize need my help too?

I felt thrown on the horns of an ethical dilemma, a dilemma that I’m sure Cadbury’s had already considered; Third World versus Home Grown. Cadbury’s have obviously pitched down on the side of the Developing world and they are banking on their customers doing the same. Not that they are particularly going out of their way to draw their customers attention to it.

TO BE CONTINUED….

CROUCHING TIN-MINE HIDDEN DANGER

DRCongo, Electronics Leave A Comment »

Apr 042011

A version of this post appeared in Wanderlust Magazine April 2011

Crouched down low at the bottom of a Congolese mine-shaft was a little more excitement than I’d bargained for. I had been determined that I wasn’t actually going to go all the way down there myself but then circumstances took over. I think that’s par for the course in DR Congo. The air in the mine was so stiflingly hot and damp that I could hear myself panting in the pitch darkness. Only by shooting off a picture from my camera could I see from the LCD screen where I was. The mineshaft was propped up with roughly fashioned branches from the jungle outside and at the bottom, some 200 metres below the surface, it was less than two and half feet high. In front of me, the man I’d been following, Boniface was preparing to take a hammer and pick to the seam of minerals in the face of the rock. As soon as he brought down his hammer, pieces of dirt began to fall from the ceiling above me and I knew I’d seen enough – it was time to get out of there.

Despite the fact that we’re all travelling more and that the world seems to be becoming smaller and smaller, there are still some places that retain that sense of being the stuff of myth and legend. Eastern Congo is one of those places. The Foreign Office, commonsense, even your mother will tell you not to go there but the curious and adventurous traveller knows deep down that if you want to really know what it’s like then you have to go yourself.

This is very much the ethos of my new book Unfair Trade – How Big Business Exploits the World’s Poor and Why It Doesn’t Have To. My mission over the last year has been to see and experience for myself what it is like for those who work at the start of the supply chain where life is hard and often dangerous. Researching this book has taken me around the globe passing through not just Congo but Cote D’Ivoire, Afghanistan and the borders of Burma and Northern Laos amongst others.

Before Independence in 1960, Congo was actually quite the de rigeur adventure holiday destination. Wealthy Europeans keen to see Africa’s “heart of darkness” took cruises up the Congo River on luxurious steam powered ships and stopped off at well appointed cities with old colonial names like Leopoldville and Stanleyville. Those cities were built by the Belgians with the profits from the country’s mineral deposits. But ever since King Leopold of Belgium handed the country back to its people, the cities and the people living in them have fallen on hard times.

Congo’s recent troubles began when the ethnic violence of the genocide in neighbouring Rwanda spilt over its borders. Rwandan militia groups have occupied the jungles of Eastern Congo ever since, terrorising its people while simultaneously profiting from the trade in its minerals. Back to back wars have left 5 million people dead in the last 10 years. If what has happened there had happened in Europe it would have been labelled World War Three but instead, Congo has been largely overlooked by the world’s media.

The reason I was in DR Congo was to investigate the trade in minerals from Eastern Congo, specifically cassiterite, a mineral that is necessary for the production of the chips that go in laptops and cell-phones. I went to try to put some flesh on the ethical debate about trading in minerals from conflict areas by spending time talking with miners like Boniface. While others in the West debate the rights and wrongs of a ban on the mineral trade, these brave men risk their lives every day when they descend into precariously constructed mineshafts in search of minerals. They don’t have any association with militia groups nor have they ever been involved in the fighting, for Boniface and the other miners, digging simply represents their only way to make a living.

It’s a difficult dilemma for the international community but what is clear from listening to the miners is that the last thing they want is for us to turn our backs and walk away. Many say that their dream is to work for a Western mining company, to have proper safety equipment and a weekly wage. But for now at least, mining this way is how they feed their families and so if it were banned, they would only be forced to find ways to smuggle it out of the country.

It’s a stark lesson in the danger of taking an ethical standpoint from afar. The reality is often complex and the issues need to be investigated at first hand to be fully understood. The big players within the international electronics industry who depend on the minerals Boniface and his colleagues dig out of that mine could do listening to those issues for themselves.

The Coop - Ethically Sold Out?

Coop, Ethical Selling Leave A Comment »

Apr 022011

Everybody know the Coop as Britain’s ‘greenest’ supermarket, a purveyor of all things organic and fair-trade. This week they published their annual accounts and recorded a whopping rise in profits of nearly 50% or around £200 million.

I came across at least one comment from the press that this was “proof” that ethical sells. But is it?

Look a little closer at the Coop accounts and you’ll see a rather different picture. First, like for like sales in their stores i.e. the organic vegetables and the fair-trade coffee were flat compared with last year. The grocery end of the business it seems isn’t quite the golden egg that the press release would have you believe it is.

But the extra profit must be coming from somewhere. So where? Well in a word, banking. The Coop’s banking arm last year merged with Britannia Building Society and this has been the primary driver behind the group’s recent success. Profits here are up by 25% largely thanks to the extra profit brought in from Britannia. The Coop model seems to be to pursue more of the same – there are plans to acquire 600 branches from Lloyds Banking Group when they’re sold off later this year.

So from these results at least, it would seem that there is little evidence that ethical does in fact, “sell” any better than anything else. What they do show is that banking is back to being profitable and one of its oldest tricks, mergers and acquisitions, still does a good job of boosting the bottom line.