CSR: Bridging Business and Development for Sustainability
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CSR: Bridging business and development for sustainability A case study of CSR implementation at coffee houses as enabler for sustainable development and livelihood among small-scale producers Janne Melbye Gillgren Supervisor Hanne Sortevik Haaland This Master’s Thesis is carried out as a part of the education at the University of Agder and is therefore approved as a part of this education. However, this does not imply that the University answers for the methods that are used or the conclusions that are drawn. University of Agder, [2010] Faculty of [Economics and Social Science] Department of [Development Studies] UT-503 Master Thesis Janne M. Gillgren ii UT-503 Master Thesis Janne M. Gillgren Abstract A prerequisite for achievement of sustainable development is economical growth (NorwegianGovernment, 2008-2009). Today an increasing number of corporations in the Western world implement the concept of Corporate Social Responsibility (CSR) (NorwegianEmbassyMexico, 2010a; NorwegianGovernment, 2008-2009). Accountability theories suggests that CSR initiatives increases transparency and accountability of a company, which again increases its legitimacy (Bendell, 2000; Utting, 2005). CSR is makes ―(…) companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (EU Commission, 2001, p. 6 in Kalstad 2006, p. 10). Fairtrade is a concept which cutting back on middlemen, making a larger degree of the surplus stay with the producer, providing an averagely higher price, a higher degree of life security, and possibly a more sustainable livelihood among rural poor in the South (Aranda, 2002; Bacon, 2004; Boersma, 2002; Jaffee, 2007; Murray, 2003; Ronchi, 2002; Wise, 2005). To reach out Fairtrade is dependent on manufacturers to sell their product. Is Fairtrade sustainable, in the manner that the corporations will continue to sell certified coffee? When CSR is realized through Fairtrade involvement, does it contribute to sustainable development? Several studies documents Fairtrade‟s effect, and CSR too, though not interlinked. When so; do they interact as an alternative to aid, contributing to sustainable livelihood, creating a mutual partnership between international and local actors? The empirical investigation is based on a case study of five Coffee Houses in Norway, and the members of MICHIZA, a small-scale coffee producer cooperative in Oaxaca, Mexico. In addition a literature study has been carried out. All corporations have a CSR strategy, and are either selling or have sold Fairtrade certified coffee. They are selling the certified coffee due to demand, though also as part of their CSR strategy, operating more environmental and social responsible. The corporations have realized that selling certified coffee is more sustainable for all parties, and they profit on it, being able to maintain quality and production in the long run which if not organic produced threathens to deploy the soil creating an environmental threathening production. Selling Fairtrade coffee may easily be part of the corporations CSR strategies; and the production will persist, due to a mutual benefit. MICHIZA‟s members are producing Fairtrade certified organic coffee. Being organized in MICHIZA has contributed to improve life, a more sustainable livelihood, though not at all areas, and not sufficiently. The corporations realize this, though handle by having a variety of different development projects, though not necessary directed towards the coffee producers. Fairtrade however have contributed to MICHIZA‟s members improved living conditions, and more sustainable livelihood and development. CSR may be implied as development enabler; economical growth is a prerequisite for sustainable development. When economical investment is mutual beneficial it is more likely to be maintained. CSR realized through Fairtrade creates an environment for sustainability, and some corporations have realized the mutual dependency for assurance of future production, and sale. And not atleast does the producers, corporations and consumers of coffe all benefit on it. iii UT-503 Master Thesis Janne M. Gillgren Acknowledgments The naive idealism slowly faints parallel with my increased knowledge. The world is unfair, though the importance for believing in justice is endless, and invaluable, and the hope for a better future for all necessary to create change. This thesis is the end of two (three) challenging, exiting and instructive years at this Masters Degree, and the end of several years of studies. I would like to thank all co-students and professors for your inspiration and contributions during these years. I would also like to thank Hanne Sortevik Haaland, my supervisor; thank you for supervising me in spite of your maternity leave; for your guidance, encouragement and critical comments that were of great value, I dare say this assignment would not have been what it has become without your valuable supervision. This thesis would not have been if the coffee houses had declined my interviews, thank you for answering my questions, even the critical ones. I encourage your initiatives for the mutual benefit for the producers, and hope you will continue as manufacturers of Fairtrade certified products, and that eventually such certification are no longer necessary. However my gratitude mostly goes to MICHIZA‟s members; without you this thesis would not have been. Thank you for letting me observe and participate in your dailylife. Thank you for letting me stay with you and ask you my millions of questions. I would especially thank; Araceli, Rigoberto, Hermenegilde, Theo, Sebastian, Juan and Eustaquio. Also I would like to thank my family; though mostly my parents Hanne and Knut Henrik, for unlimited encouragements and support throughout my education. Last, but not least my husband for his never ending believe in me, and for following me to Mexico with our son, who took his first step in Oaxaca, a memory for life. iv UT-503 Master Thesis Janne M. Gillgren Table of content Abstract……………………………………………………………………………………iii Acknowledgements………………………………………………………………………..iv Table of contents…………………………………………………………………………...v List of figures……………………………………………………………………….........viii List of photos…………………………………………………………………………….viii List of tables…………………………………..…………………………………………viii List of appendices………………………………………………………………………..viii List of abbreviations………………………………………….…………………………...ix List of translations….………………………………………...…………………………….x 1. INTRODUCTION………………………………………………………………………..1 1.1. Background………………………………………………………………………...1 1.2. Research objectives………………………………………………………………...3 1.3. Thesis outline – methodology in brief...…………………………………………...4 2. LITERATURE REVIEW AND THEORETICAL FRAMEWORK………………….5 2.1. Introduction……………………………………………………………………….5 2.2. Corporate Social Responsibility……………………………………....................5 2.2.1. CSR in Mexico……………………………………………………………..…..7 2.2.2. Interpretation of CSR…………………………………………………………..8 2.2.3. Measuring CSR………………………………………………………………...9 2.3. Fair trade and „Fairtrade‟.......….………………………………………………10 2.3.1. FLO-Cert………………….…………………………………………………..13 2.3.2. Benefits of Fairtrade….………………………….…………………………....15 2.4. Sustainable development and livelihood……………………………………….17 2.5. Merging CSR, Fairtrade and sustainability …………………………………..19 2.6. Theoretical framework...………………………………………………………..24 3. RESEARCH AREA AND CONTEXTUAL OVERVIEW……………………………27 3.1. The United States of Mexico……………………………………………………27 3.1.1. Socio economic context - Oaxaca……………………………………………29 3.2. The cooperative MICHIZA – Yeni Navan – a short introduction……………30 3.3. A brief history of coffee ………………………………………………………..33 4. METHODOLOGY………………………………………………………………..........39 4.1. Introduction………………………………….…………………………………..39 4.2. Research strategy and design………………..………………………………….39 4.3. Data collection…………………………………………………………………...40 4.3.1. Secondary sources – document analysis……………………………………...40 4.3.2. Primary sources - interviews………………………………………………….41 4.3.3. Focus groups………………………………………………………………….45 4.3.4. Participant Observation……………………………………………………….46 4.4. Interpretation of data…………………………………………………………...46 4.5. Ethical considerations/aspects of the research………………………………...47 4.6. Limitations and challenges……………………………………………………...47 4.6.1. Establishing contact…………………………………………………………..47 4.6.2. Representative selection………………………………………………………48 4.6.3. Conducting research in a foreign language…………………………………...48 v UT-503 Master Thesis Janne M. Gillgren 4.6.4. Personal challenges…………………………………………………………...49 4.7. Reliability of data………………………………………………………………..49 4.8. Assumptions……………………………………………………………………...50 5. THE INTERNATIONAL ACTORS: THE COFFEE HOUSES…………………......51 5.1. Introduction……………………………………………………………………...51 5.1.1. Kaffehuset Friele……………………………………………………………...51 5.1.2. Joh. Johannson Kaffe AS……………………………………………………..51 5.1.3. Kjeldsberg Kaffebrenneri……………………………………………………..52 5.1.4. Löfbergs Lila AS……………………………………………………………...52 5.1.5. A/S Pals……………………………………………………………………….53 5.2. Interpreting Social Responsibility..................................……………………….53 5.2.1. Kaffehuset Friele……………………………………………………………...53 5.2.2. Joh. Johannson Kaffe AS……………………………………………………..54 5.2.3. Kjeldsberg Kaffebrenneri……………………………………………………..54 5.2.4. Löfbergs Lila AS……………………………………………………………...55 5.2.5. A/S Pals……………………………………………………………………….56 5.3. Acting Social Responsible ……………………………………………………...57 5.3.1. Kaffehuset Friele……………………………………………………………...57 5.3.2. Joh. Johannson Kaffe AS……………………………………………………..57