Search results: the corporation not me

In the latest issue of the American Journal of Public Health, Derek Yach and his colleagues at PepsiCo in Purchase, NY, say yes, it can, in answer to the question they pose in their article, “Can the food industry help tackle the growing global burden of undernutrition?”

If we are to successfully combat global undernutrition, efforts must be sustained by multiple stakeholders from various sectors. We believe that trust is built through industry’s demonstration of practical actions that improve health, and recognition of these actions by governments and nongovernmental organizations. Only through new and innovative public–private sector partnerships can we truly make a difference.

Three international public health leaders counter with no, it can’t, in an article entitled “The snack attack.”  They point to irreconcilable differences between the the goals of private industry and public health:

The problem lies with food, drink, and associated companies whose profits depend on products that damage public health and that also have damaging social, economic, and environmental impacts. These most of all include transnational companies, of which PepsiCo is one. To succeed, big business must sustain and increase annual turnover, profit, and share price…We suggest that public health professionals see papers such as those of Yach et al. as part of the marketing strategies of transnational food and drink companies…The privatization of public health does not work.

This argument reminds me of the editorial that David Ludwig and I wrote for JAMA late in 2008: “Can the food industry play a constructive role in the obesity epidemic?”  We concluded:

With respect to obesity, the food industry has acted at times constructively, at times outrageously. But inferences from any one action miss a fundamental point: in a market-driven economy, industry tends to act opportunistically in the interests of maximizing profit. Problems arise when society fails to perceive this situation accurately.

While visionary CEOs and enlightened food company cultures may exist, society cannot depend on them to address obesity voluntarily, any more than it can base national strategies to reduce highway fatalities and global warming solely on the goodwill of the automobile industry. Rather, appropriate checks and balances are needed to align the financial interests of the food industry with the goals of public health.

PepsiCo owns Pepsi Cola, of course, but also Gatorade, Frito-Lay snacks, and Aquafina water, among many other brands.  According to Advertising Age (June 22, 2009), PepsiCo earned $43 billion in worldwide sales in 2008. Its product-specific advertising expenditures in 2008, just for “measured media” (meaning run through advertising agencies) were, for example:

• $162 million for Gatorade
• $145 million for Pepsi Cola
• $27 million for Tostitos
• $14 million for Doritos
• $11 million for Fritos.

These figures, staggering as they may be, do not include the amounts Pepsi spends on lobbying, supporting the American Beverage Association’s efforts to fight soda taxes, funding medical research at Yale, or marketing to children and adults in India and other developing countries, as previously discussed on this site.

Is corporate “social responsibility” really responsible?  Or is it just marketing?  And what should be the checks and balances?  You decide.

Added April 17: This comes from a former employee of PepsiCo who asks that I post this anonymously:

I think you probably know that the “marketing dollars,” the share (ads/direct marketing), of companies like Pepsico are only a fraction of what are their actually marketing/promotions budgets.  Many years ago, PepsiCo made a conscious effort to redefine/shift budgets to what is called promotional spending from traditional marketing spending.  In doing so though, they keep the control and allocation of the funds in the hands of the marketing teams.

For Pepsi I know that the $145 million you mention is probably only 25% of what Pepsi “internally” considers consumer marketing spending.  For example, direct to retails “incentive” bonus funds are given for moving volume — those funds are almost entirely funneled into the retails increasing consumer marketing to their direct customers.  There are even examples where they can hide 10’s of millions of dollars at a time by linking event sponsorships (stadiums, etc.) to retailer agreements, thus moving those dollars to long-term “capital expenditures.”  I would guess that for Pepsi alone that that $145 million could be as much as a billion a year for direct and indirect consumer marketing spending.

It is not just obscene how much gets spent to increase volume… since, for companies like PepsiCo, Coke, etc.  Volume is the only way they generate higher profit to their shareholders.  As you say, to expect a corporation to do things for the good of the consumer just shows a misunderstanding of their primary function when they are a for-profit entity.

For reasons that make no sense to me at all, corporations are not allowed to simply make a profit.  Their profits must constantly increase.  They must report growth in profits to Wall Street every 90 days.

For food companies, this is not so easy.  We already have twice as many calories available in the food supply as needed by our population –  nearly 4,000 calories per capita per day.  How to deal with this?  Find new buyers.

General Mills says its “recipe for profitable growth” will target three specific groups: Hispanics, aging baby boomers (those aged 55 and over), and millennials (baby boomers’ kids aged 16-33).  General Mills owns cereals and fruit roll-ups, among other such products.

According to MinnPost.com, General Mills is now the leading advertiser in U.S. Hispanic media.

But General Mills expects most of its growth to come from emerging markets like China.  Sales in China tripled from 2005 to 2009 and are expect to reach $900 million by 2015. Sales of General Mills’ Häagen-Dazs* ice cream are booming in China.

Isn’t it fun to be a target of General Mills’ growth strategies?  I assume all major food companies have their eyes on the same target.

*Factoid footnote: Nestlé owns Häagen-Dazs in the U.S. and Canada.  General Mills owns the brand everywhere else, including in China.

I greatly admire the work of Jared Diamond.  His book, Guns, Germs, and Steel: The Fate of Human Societies, is as clear an explanation as you will ever get of how the inequitable distribution of favorable geography, climate, and natural resources affects the development and maintenance of human societies.

But here he is, incredibly, in the Sunday New York Times writing a fan letter to corporate social responsibility for protecting those favorable environments.  He writes:

There is a widespread view, particularly among environmentalists and liberals, that big businesses are environmentally destructive, greedy, evil and driven by short-term profits. I know — because I used to share that view.  But today I have more nuanced feelings…I’ve discovered that while some businesses are indeed as destructive as many suspect, others are among the world’s strongest positive forces for environmental sustainability.

And which corporations does he include as “strongest positive forces?”  Chevron, Walmart, and Coca-Cola.   I’ll leave discussion of Chevron and Walmart to others, but Coca-Cola?

Coca-Cola, Diamond says, is protecting the world’s water supplies.  The company needs clean water in the 200 countries in which it operates.  This, says Diamond:

compels it to be deeply concerned with problems of water scarcity, energy, climate change and agriculture. One company goal is to make its plants water-neutral, returning to the environment water in quantities equal to the amount used in beverages and their production. Another goal is to work on the conservation of seven of the world’s river basins, including the Rio Grande, Yangtze, Mekong and Danube — all of them sites of major environmental concerns besides supplying water for Coca-Cola. These long-term goals are in addition to Coca-Cola’s short-term cost-saving environmental practices, like recycling plastic bottles, replacing petroleum-based plastic in bottles with organic material, reducing energy consumption and increasing sales volume while decreasing water use.

Please note the future tense.  These are things Coke says it plans to do.  As for what the company is doing now, Diamond does not say.  His piece does not mention Coke’s negotiating with officials in developing countries to buy water at rates significantly below those charged to local communities, a topic under much discussion when I was in India last year.  It does not mention campaigns in India to hold Coke accountable for its abuse of local water rights or any of the similar campaigns in other countries.

Diamond’s piece does not talk about the efforts Coke puts into selling bottled water at the expense of local water supplies.  As described by Elizabeth Royte in her book, Bottlemania, companies like Coke exhibit every one of of the characteristics formerly deplored by Diamond in attempting to secure plentiful and reliable sources of cheap local water: in his words, “environmentally destructive, greedy, evil and driven by short-term profits.”

Diamond says he sits along side and has gotten to know and appreciate the motives of many corporate executives.  Me too.  Personally, many of them mean well and wish that they could do more to be socially responsible.  But they work for businesses that are required, by law, to make short-term profit their reason for existence.  This means that corporate social responsibility is necessarily limited to actions that bring visible – and immediate – returns on investment.

We need some critical thinking here.  If Diamond gave any thought at all to what Coca-Cola produces – bottled water and sodas – he would surely have to agree that less of both would be good for our own health and that of the planet.

I’m getting caught up on my journal reading and have just run across the May 16-22 issue of The Lancet devoted to a commission report on climate change.  The cover quote: “Climate change is the biggest global health threat of the 21st century.”

Among other things, the report addresses the effects of climate change on food production and water availability, none of them good.  It raises issues well worth discussion:

The present structure, organisation, and control fo the globalised food and agricultural system are failing to address the needs of both poor people and the environment.  For example, profits of giant agricultural and food corporations increased greatly in 2008, when the number of hungry people grew.

The report is well referenced and is a great resource for information about what climate change will do to food and agriculture.  But the report does not deal with the ways in which agriculture contributes to climate change.  For that angle, see previous posts.

Bill Marler, the lawyer whose specialty is helping clients obtain compensation for food poisonings, knows as much about food safety – or the lack thereof – as anyone I know.  He estimates the total cost of the peanut butter recalls as close to $1 billion.  This accounts for the costs of the recalls themselves ($75 million to Kellogg alone), as well as the costs of lost sales, advertising and public relations, and stock prices.  And that’s just to the companies.  Perhaps he will do another estimate for the 677 people (as of March 1) who are known to have become ill as a result.

In the meantime, the fact that Peanut Corporation of America filed for bankruptcy is unlikely to affect victims’ ability to collect damages.  Much of those costs will be covered by insurance.

I guess food companies think it’s cheaper to do things this way than to produce safe food in the first place.  That, of course, is why we need better federal oversight, and the sooner the better.

Guidance alert, just in: the FDA has issued after-the-fact advice to the industry about how to produce peanuts safely.

Update March 12: Phil Lempert, the Supermarket Guru, polled readers about the recalls.  All knew about them and most were not buying recalled products.  But 45% said they had stopped buying peanut butter, even though regular peanut butter was not involved in the recalls.

The New York Times today has a long investigative report on its front page about the implications of the peanut butter recalls for food safety in America.  It’s a terrific article and it’s wonderful that the Times has at last discovered that the U.S. food safety system is deeply dysfunctional, something the Government Accountability Office has been screaming about for years.

In the meantime, the list of company recalls keeps getting longer (the FDA website identifies them with a bright red NEW!  Safe Tables Our Priority, a group devoted to protecting children from unsafe food, publishes a daily list of individually recalled peanut butter products.  Today’s collection alone numbers nearly 40 and is well worth a look.  So are the CDC’s cute reminders to throw out your recalled products.

And I can’t resist adding a comment on peanut politics.  The Center for Science in the Public Interest’s Integrity in Science Watch sends out daily feeds.  Today’s (not yet posted) refers to a story in the Atlanta Journal Constitution revealing that the USDA, not the FDA, is responsible for the safety of exported peanuts (they might contain aflatoxin), that its Peanut Standards Board was exempted from conflict -of-interest rules by the 2002 Farm Bill, and that the head of Peanut Corporation of America, the company responsible for the tainted peanut butter, was appointed in October as a member of that Board until 2011.

What more evidence do we need that an overhaul of the food safety system is very much in order.  Congress: this is your problem to solve!  Citizens: write your congressional representatives!

The CDC reports more than 500 cases and 8 deaths from Salmonella typimurium in peanut butter produced at a single plant in Georgia owned by Peanut Corporation of America (PCA).

Fortunately, the number of reported cases is going down.FDA officials reveal that the PCA plant has a history of knowingly shipping peanut butter contaminated with Salmonella. But these incidents did not involve the same strain.

The peanut industry says this is one bad peanut and everyone else’s peanuts are OK.

I say (again and again): Peanuts are not kcovered by standard food safety regulations (voluntary Good Manufacturing Practices demonstrably do not work).  We need HACCP food safety regulations – with Pathogen Reduction –  for all foods, from farm to table.

January 30 update: Apparently, the New York Times editorial staff agrees with me!  And no wonder, given what their reporters are saying about ithis incident.

How serious a problem is Bisphenol A, the hormone-like substance that leaches from some plastic water bottles?  The answer: how would we know?  According to investigative reporter, David Case, most of the studies of bisphenol A toxicity are sponsored by corporations that spin the results.  Take a look at his most interesting January 14 report, The real story behind bisphenol A.

In theory, whoever is paying for a study should not matter.  In practice, the sponsor matters a lot.  It’s not that scientific investigators are corrupt; most aren’t.  But sponsorship – perhaps unconsciously – influences the design of studies as well as their interpretation.   According to Case, the bisphenol A studies are a good example of this phenomenon.  You can find other examples filed under Sponsorship.