Company Management Oriented Towards Sustainable Development: An Indirect Form of Protection of Food Diversity?

Monteduro (2015).

Monteduro (2015).

Tommasi (2017).

Nestlé has been accused of an aggressive and irresponsible commercial policy in developing countries where powdered milk for newborns is concerned. The milk is distributed in hospitals for free. UNICEF has declared that the substitution of mother’s milk for powdered milk in third world countries has caused the death of one and a half million babies each year because of problems with the sterilization of water and bottles. Furthermore, despite the adoption of the International Code of Marketing of Breast milk substitutes on behalf of the World Health Organization to which the multinational has adhered, verification has shown repeated infractions of the same. Added to this is the scandal that directly involved Italy in 2009, the year that the Italian industry was criminally convicted and ordered to pay damages, along with Tetra Pak International, for the contamination of Nidina milk with a chemical component used in the ink for packaging of Tetra Pak. In essence, the component had contaminated the milk contained in the packaging.

In 2004, a test carried out by Greenpeace showed the presence of genetically modified organisms in a package of Nesquik. In 2010, in Brazil, after an investigation carried out by Senacon, a consumer protection agency, the Brazilian Minister of Justice fined Nestlé, Pepsi and the Mexican company Grupo Bimbo for having hidden the presence of genetically modified organisms in their products.

The Coca Cola Company was ordered to pay India 350 euro compensation after having caused serious environmental and health damages near its bottling plant in Plachimada in the State of Kerala (Southern India. A framework of multi-sectorial damage was identified. Particularly, the multinational “caused environmental degradation through the overexploitation of the aquifer and its relative impoverishing and by the irresponsible practice of dispersing waste. The latter was presented to the farmers as fertilizer thereby contaminating the land and water with toxic metals such as: cadmium, lead and chrome.

Monsanto was founded in 1901 in St. Louis, US, by John Queen and soon became the top US producer of saccharine. During its history, the company went from producing ingredients for the pharmaceutical and food industries to a company involved in the production of chemical products and phosphates, until its entrance, in the 1960s, into the agricultural sector; and finally, at the end of the 1970s, the biotechnological field in agriculture. In 1987, Monsanto decided to separate the chemical business from the others. In 2000, the current Monsanto Company was born with agriculture as its core business.

The most well-known incidents regard the following: Agent Orange produced by Monsanto e Dow Chemical for the US army involved in Vietnam. The substance was sprayed by the US aviation in Southern Vietnam from 1961 to 1971. The official objective of the operation, called Operation Ranch Hand, was to destroy the forests where the Vietcong were hiding, thus depriving them of cover and reducing their possibility to procure food. The result was 400 thousand dead, 500 thousand children born with serious malformations and 4 million people struck by tumors in the following years. Another well-known scandal was the use of polychlorinated biphenyls (PCB) in materials for repairing buildings, electronic devises, and paint. Thousands of buildings were contaminated. Particularly well-known is the episode of the “bovine growth hormone”. This genetically modified hormone was created to stimulate milk production in bovines, but the effects on livestock health were devastating. And that is not all, there were consequences on consumer health too; a link between the hormone and breast cancer, colon cancer, and prostate cancer.

In 2012 the Hamburger scandal in the United States when it was discovered that they used hamburger meat with an added substance called pink slime: a mush obtained from remains of the slaughter and deboning of livestock that was then washed with ammonia and put in the ground meat in various percentages before being frozen. In 2014 the scandal of expired rotten meat imported from China and used in the fast food chains: McDonald’s, KFC and Pizza Hut.

Musumeci (2005).

Durazzo (2010).

This new concept of business seems to be shared by some multinationals operating in the food industry, just think of the most important event with the theme of diet and food, I am referring to Expo 2015, whose motto was “Feeding the planet, Energy for life” and whose main themes were, among others, bettering the quality and safety of foods, the protection of biodiversity, respect for the environment as an ecosystem for agriculture and the enhancing the value of cultural and ethnic elements as “culinary tradition”; yes, indeed, it had among its sponsors McDonald’s and Coca-Cola.

Monteduro (2015), according to whom “the individual life of an organism is made possible by the differentiation of cells, tissues, organs and apparatus. The diversity of living species, that is biodiversity, is a precondition to the maturity, complexity, wealth and resilience of ecosystems. For socio-systems, that precondition is essentially cultural diversity”.

Monteduro (2015).

In 2004 the FAO organized “World Food Day” in which it underlined that “A rich variety of cultivated plants and domesticated animals are the foundation for agricultural biodiversity. Yet people depend on just 14 mammal and bird species for 90% of their food supply from animals. And just four species—wheat, maize, rice and potato—provide half of our energy from plants. Apart from the absolute number of species, it is also essential to conserve genetic diversity within each species. Modern agriculture has encouraged many farmers to adopt uniform high-yielding types of plant or animal. But when food producers abandon diversity, varieties and breeds may die out—along with specialized traits. This rapidly diminishing gene pool worries experts. Having a broad range of unique characteristics allows plants and animals to be bred to meet changing conditions, while giving scientists the raw materials they need to develop more productive and resilient crop varieties and breeds. Rather than a single crop variety that guarantees a high yield, farmers in developing countries are more likely to need an assortment of crops that grow well in harsh climates, or animals with resistance to disease. For the poorest farmers, the diversity of life may be their best protection against starvation. Consumers also benefit from diversity through a wide choice of plants and animals. This contributes to a nutritious diet, particularly important for rural communities with limited access to markets.” The FAO estimates that “three-quarters of the genetic diversity of agricultural crops have been lost over the last century. And of 6300 animal breeds, 1350 are endangered or already extinct. Global efforts to conserve plants and animals in gene banks, botanical gardens and zoos are vital. But an equally important task is to maintain biodiversity on farms and in nature, where it can evolve and adapt to changing conditions or competition with other species. As custodians of the world’s biodiversity, farmers can develop and maintain local plants and trees and reproduce indigenous animals, ensuring their survival. The document can be found at: http://​www.​fao.​org/​docrep/​006/​y5418i/​y5418i00.​HTM.

The concept of sustainability, in this sense, is connected to the compatibility of the development of economic activities and environmental protection. The ability to satisfy basic needs implies, therefore, the creation of economic development that has the environment, as its main objective, but at the same time also sees richer countries adopt production processes and lifestyles compatible with the ability of the biosphere to absorb the effects of human activities and developing countries grow in demographic and economic terms at a pace that is compatible with the ecosystem. The concept of sustainable development was drawn up by the Brundtland Commission from two fundamental elements: the environment as a key dimension of economic development and intergenerational responsibility in the use of natural resources.

Vercelli (2005a); Mascia (2007).

Mascia (2007).

Libertini (2006).

Vercelli (2005b).

In reality, entrepreneurship if, on one hand, brings utility and welfare to society as the driving force of economic development; on the other hand, it could cause damage to the basic assets of individuals and communities (health, environment, human dignity, biodiversity) and moreover, economic power could lead it to engage in opportunistic behavior. Businesses, given the increasing globalization, are often encouraged to profit from the possibility of establishing their operations in countries with backward regulatory systems. These countries are often lacking in the most basic rules for the protection of fundamental human and social rights and consequently, can offer traders a particular freedom of action and cost savings. The topic of business ethics is quite vast and we can find ample economic, business-economic and sociological literature on the subject. See: Sen (1998), Nobel prize winner in Economic Science. See also Sacconi (1991), D’Orazio (2002), Corno (2002), Rossi (2003) and Buonocore (2004).

All those activities imposed by laws that protect interests outside the company or the interests of those who enter into contractual relations with it are excluded. See Calandra Buonaura (2011).

Libertini (2009).

The United Nations Conference on the Environment and Development held in Rio de Janeiro in 1992, strengthened the principle of sustainable development through the formalization of the acts adopted after the Summit: The Rio Declaration on Environment and Development, Agenda 21 and Non-Legally Binding Authoritative Statement of Principles for a Global Consensus on the Management, Conservation and Sustainable Development of All Types of Forests. The notion of sustainable development was also embraced in the environmental treaties to be signed in Rio: specifically, the Convention on Climate Change that came into force in 1994, and the Convention on Biological Diversity that went into effect in 1993. Particularly, Article 2 of the Convention on Biological Diversity contains the concept of ‘sustainability’, defining the ‘sustainable’ use of biological resources in a manner and at a pace that does not imply a long-term reduction and that maintains the capacity to meet the needs of both present and future generations. The Acts of Rio and subsequent world conferences promoted by the United Nations, especially the Johannesburg Conference in 2002, confirm a principle of sustainable development based on three interdependent factors: environmental protection, economic growth and social development. Since the UNCED, sustainable development has been consolidated as a principle of international law and has contributed to the evolution of international environmental law through the conclusion of global environmental treaties and several regional agreements. In the European Union, sustainable development is fundamental to the actions and policies of the Union in environmental matters.

Global Compact is the UN initiative on corporate social responsibility launched by the UN Secretary General Kofi Annan at the World Economic Forum in Davos—Switzerland-1999.The Global Compact is the UN initiative on corporate social responsibility launched by the UN Secretary General, Kofi Annan, at the World Economic Forum in Davos—Switzerland- in 1999. The aim is to invite companies, agencies of the UN, trade unions and society to make a “Global Pact” to promote corporate social responsibility through voluntary compliance and the promotion of ten fundamental principles relating to human rights, labor, environment and the fight against corruption. It is not a legislative instrument, but is a reference framework that is based on the voluntary choice of companies to commit themselves to responsible corporate citizenship; trusting in public accountability, transparency and a new awareness of the individual interests of companies and other entities engaged in social work.

For a vast discussion of the principles of OCSE 2011 see: Gulotta (2012).

Green Papers—Promoting a European framework for corporate social responsibility COM (2001) 366; Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee of 22 March com 2006 136; Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee and the Committee of the Regions COM/2011/0681.

Calandra Buonaura (2011), according to whom “from the vast literature and, above all, from the documents drawn up by international bodies that have dealt with corporate social responsibility, we get the impression of such a generality and vagueness in the definition of not only the scope and content, but also in the inspiring principles of that responsibility as to create a noticeable bewilderment in the jurist who wants to find indications on which to define rules of governance to which administrators must adhere”.

Costi (2006), according to whom in the range of stakeholders it is necessary to distinguish between “stakeholders that have contractual relations with the business (consumers, suppliers and employees) and stakeholders who are not tied to it through a specific relationship, such as the community in which the business operates. In the first case the stakeholders give their contribution to the company in the various roles of employees, consumers and suppliers; in the latter stakeholders’ interest can be positive (community wellbeing), but often has a negative sign, that is, the interest of the community is to come out unscathed (so-called negative externalities) which might come from the business operations (think of environmental damage)”.

Costi (2006).

Calandra Buonaura (2011).

Art. 2247 cod. civ.

Art. 2511 cod. civ.

Calandra Buonaura (2011).

The debate among jurists related to the nature of social interests ended with the substantial victory of the contractual positions exalting the maximization of “shareholder value” as the main objective of a business in a context characterized by an increasing autonomy of managers and “by an increasing pressure of financial markets and institutional investors on the performance of the same managers”. See Libertini (2009). In this way the company is conceived as an “autonomous center of financial programming of the adding value to invested capital, with great autonomy in the choice of productive tools, found on global markets with the possibility of decentralization”. See still: Costi (2006); Calandra Buonaura (2011).

One could ask if a majority is enough or is it necessary for it to be a unanimous decision.

Luchena (2011).

The term cannot be taken in the strict sense of the word because a mediating body should be either absolutely disinterested or adequately representative of the different parties to be trustworthy. See Denozza (2005).

Romagnoli (2002), according to whom anyone involved in the economic analysis of organized business tends to consider simultaneously the interests of members (shareholders) and the third parties involved in the initiative of the issuer (stakeholders) in a perspective of continuity that seems to dilute the differences between those who are part of a contract and those who are not.

Denozza (2005), according to whom “the normative framework puts administrators in a position in which the complete satisfaction of the interests of partners protects them both from losing their job and from legal liability; while the satisfaction of the other stakeholders’ interests, if it conflicts with the satisfaction of that of the partners, exposes them, at best case, to risks and, in the worst case, to the certainty of negative consequences. In this situation you could not even ask a saint to behave as a mere mediator”.

Calandra Buonaura (2011).

Horn (1980); Hamilton (1984); Muchlinski (1995).

See Luchena (2011).

See: Luchena (2011), note n. 7.

Luchena (2011).

Costi (2006).

Rossi (2008).

Irti (2003). See still: Tommasi (2012).

Luchena (2011), note n. 25.

Toffoletto (2008).With the reform of corporate law in 2003 the obligation of an “adequate organizational structure” became a main feature on which to base the modern concept of corporate social responsibility for organizational risk both from a standpoint of public law (criminal liability) and from a standpoint of civil law (damage payment). See: Pecoraro (2005).

Pecoraro (2005).

Rossi (2008).

Pecoraro (2005), according to whom “a universally valid compliance program does not exist”.

Costi (2006).

In America a study by the Department of Justice in 1969 had highlighted that, in a year, more than 60% of the companies examined had been convicted. Later, research done in 1980 by Fortune magazine showed that over a 10-year period, 11% of the “most respected” companies had been caught red-handed committing what the magazine defined as “flashy offenses” (rigged contracts, large scale scams, corruption of senior officials). In the 1980s all sorts of crimes occurred (fraud committed by the most well-known brokerage companies, savings institutions, health firms and insurance companies). The situation continued into the 1990s, a time when fines were imposed for antitrust violations and rigged contracts. Edward Kennedy said “corporate crime robs the nation. They rob our children of clean air and water, they rob our elders in terms of mental health, enticing them with ill-advised investments; they rob people whose lives depend on medication that is effective changing it with dangerous and inefficient drugs. This is how corporate crime undermines public confidence in our free market system”. Moral of the story: despite the extraordinary apparatus realized to protect transparency in 1933; despite the extraordinary work done by the SEC in the 1970s and 1980s, it became clear that the system of preventative controls was partially in vain. And so, in 1991 the U.S. Sentencing Commission, established in 1984, launched a reform inspired by the carrot-stick philosophy, establishing high fines (stick) and simultaneous reduction of the same, up to 80% and more (carrot) for firms that established self-regulatory programs (so-called compliance programs), thus giving “an injection of ethics to business”. However, businesses had preceded the reform by launching the idea that any “good” company should have a code of ethics, but this expedient soon revealed its limits. Since the ethical codes did not foresee any sanctions, they became a mere alibi created to reassure partners of the morality and purification of company culture, but without any authentic self-regulatory measures. Basically, a fraud that led some commentators to conclude: “business ethics has become the business of ethics.” The situation changed completely with the reform of 1991. Different than the codes of ethics, violation of the compliance programs is hit hard as hard as possible by the law, including the ‘death’ of the company. The reference to individual ethics is the premise on which compliance programs are built.

Costi (2006).

For a vast panorama on the progressive expansion of corporate reporting see Incollingo (2014).

See: Castellani (2015).

From an examination of the recitals it emerges that the directive represents the final moment of a path started a while ago in the European Union that concerns the ethical, social and environmental topics, a path aimed at bettering the quality, transparency and comparability of non-financial information. In April 2011, the Commission, in its communication entitled: “Single Market Act. Twelve levers to boost growth and strengthen confidence. Working together to create new growth”, underlined the need to bring transparency in social and environmental information furnished by firms in all sectors to a comparable level in all Member States. “The need to improve undertakings’ disclosure of social and environmental information, by presenting a legislative proposal in this field, was reiterated in the Commission communication entitled ‘A renewed EU strategy 2011–2014 for Corporate Social Responsibility’, adopted on 25 October 2011. In its resolutions of 6 February 2013 on, respectively, ‘Corporate Social Responsibility: accountable, transparent and responsible business behavior and sustainable growth’ and ‘Corporate Social Responsibility: promoting society’s interests and a route to sustainable and inclusive recovery’, the European Parliament acknowledged the importance of businesses divulging information on sustainability such as social and environmental factors, with a view to identifying sustainability risks and increasing investor and consumer trust. Indeed, disclosure of non- financial information is vital for managing change towards a sustainable global economy by combining long-term profitability with social justice and environmental protection. […] Thus, the European Parliament called on the Commission to bring forward a legislative proposal on the disclosure of non-financial information by undertakings allowing for high flexibility of action, in order to take account of the multidimensional nature of corporate social responsibility (CSR) and the diversity of the CSR policies implemented by businesses matched by a sufficient level of comparability to meet the needs of investors and other stakeholders as well as the need to provide consumers with easy access to information on the impact of businesses on society.” The Directive must be transformed into national law by Member States by 6 December 2016 and its implementation must take effect starting from 1 January 2017 (or during the year 2017).

Costi (2006).

Internationally, the most common methodology of reporting is GRI (Global Reporting Initiative). It is an independent organization whose purpose is to design, promote and disseminate guidelines for voluntary reporting of economic, environmental and social reporting to make the reporting as credible as financial reporting in terms of severity, verifiability and comparability.

Yongvanich and Guthrie (2006), Perrini and Tencati (2006) and Hopwood et al. (2010).

Costi (2006).