September 28, 2010

How Chocolate Can Save the World

Bridgespan Manager Serita Cox shares how Mars, Hershey, and other companies are looking beyond natural resources as simply manufacturing inputs.

By: Serita Cox

(This blog originally appeared on the  Harvard Business Review website.)

Mars and Hershey are giving away the farm. Mars, the company behind M&Ms and Milky Way, has cracked chocolate's DNA code and instead of immediately filing a truckload of patents to protect its intellectual property, the company is sharing it with the world. Its genome map of the cacao tree will be available on the Web for free to anyone — including its biggest competitor, Hershey. Oddly, Hershey is doing the same thing with its own map of a different variety of the tree. These two giants, who collectively account for more than $13 billion in annual chocolate sales, have funded dueling consortiums to break the tree's genetic code and are explicitly prohibiting patents. Why? Because they want to enhance their natural capital — the natural resources a company depends on.

Our Bridgespan team sat down with environmental experts like WWF's deep-thinking Jason Clay last year as part of a broader effort to explore the natural-capital concept and how developing natural capital can be a win-win for companies and the environment. When companies integrate consideration of natural resources into strategic planning, they can improve their cost positions, reduce risk, capitalize on increasingly strict environmental regulations, improve new product development, and tap new value streams. And they benefit the environment at the same time.

Like Mars and Hershey, many companies are looking beyond the traditional view of natural resources as simply manufacturing inputs to be managed as proprietary property. They are beginning to see that the ongoing value of these resources to their business and, indeed, their competitive advantage lies not in controlling a finite set of them in the near term, but in indefinitely preserving and enhancing all of the natural resource the firm uses, and the ecosystems that they're part of. The cacao tree, it turns out, is quite fragile. It is highly susceptible to pests and disease, and sensitive to growing conditions. Mars has determined that only 20 percent of its supplier's crops produce 80 percent of the high-quality beans used for chocolate. That leads to a lot of wasted time, effort, and money. By sharing the genome with everyone — university researchers, government scientists, even its competitors — Mars is encouraging more strategic breeding and innovation that will help ensure a sustainable future for cocoa, for the 6.5 million people running small-scale farms, and for the company itself.

When big business can align its focus on the bottom line with its need to ensure the sustainability of ecosystems, the world wins. Daimler, for example, used to rely largely on plastic fillers for its Mercedes-Benz headrests but began adding coconut fiber in its place. Recently, the company partnered with the South American environmental organization, POEMA, to help coconut farmers improve their farm management by promoting sustainable mixed-use agriculture. The farmers' production of coconut fiber has increased four-fold. With less risk of input shortages, Daimler has now stopped using plastic fillers entirely, realizing five percent savings in the process. Less cost, less plastic, more sustainable farming — what's not to like?

Are these just one-off examples, or is there a world where growing bottom lines and sustainable ecosystems can coexist — and even reinforce each other? What examples can you share from your own organization or field in where such win-wins exist?

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