Cargill Finds Itself Stuck Between Climate Change Activism and Denial

Cargill executives know that climate change will impact their business – but will an overemphasize on short-term results keep the company and its partners from making necessary changes?

The relationship between climate change and the agriculture industry presents an interesting paradox.  The industry has traditionally been politically conservative, and thus climate change has often been viewed as a liberal cause which could lead to harmful regulation [1].  Yet, there are few industries whose success is more linked to the health of the environment (and thus vulnerable to the effects of climate change).

As an agricultural behemoth operating in 70 countries and earning over $100 billion in annual revenue, Cargill has a lot riding on the health of the environment and climate across the globe [2].  To their credit, Cargill acknowledges that climate change is happening and could present challenges to their business [3].  Their business depends on the resilience of crops to produce sufficient yields amid inconsistent climate patterns [4].

To better understand the implications of climate change, Cargill executive chairman Greg Page has served as a member of the Risky Business Project [5].  The project was started in 2013 by New York City mayor Michael Bloomberg, former U.S. Treasury Secretary Hank Paulson, and hedge fund manager Tom Steyer, and consists of a committee of policy and business leaders with wide ranging political beliefs concerned with measuring and exposing the potential economic impacts of climate change [6].  Within Cargill’s own operations, they are taking steps that provide themselves greater flexibility in the face of climate-change induced variability.  For example, Cargill is building additional ports throughout the world so that they’ll have more locations from which to ship crops if climate change limits yields in certain markets [7].   Cargill further demonstrated its commitment to the cause in 2015 when they signed the American Business Act on Climate Pledge [8].  By signing, Cargill pledged to be a strong example of ongoing devotion to the climate change cause within the business community [8].  In a step towards that pledge, Cargill has goaled themselves to make 5 percent improvements from 2015 to 2020 in regards to energy efficiency, greenhouse gas intensity, and freshwater efficiency [4].

While the actions above seem to indicate a high level of climate change concern, there are other areas in which Cargill is coming up short.  Despite the preponderance of evidence, the Cargill isn’t ready to concede that climate change is induced by human action [7].  Furthermore, Cargill’s commitment to addressing climate change hasn’t extended to the financial donations that they make to political campaigns.  Roughly 60% of the money that the company’s Political Action Committee donated in 2016 went to candidates who deny the existence of climate change [8].  Why would Cargill make these seemingly inconsistent contributions?  In large part, the discrepancy seems to derive from the fact that Cargill and the customers that they serve are more concerned by the potentially negative short-term impacts of regulation that addresses climate change than they are about the impacts of climate change itself in the long-term.

So, where does Cargill go from here?  It seems to me that they are mostly saying the right things but are unwilling to go all-in as a climate change combatant.  I believe positioning themselves for long-term success will first require honest conversations with their farming partners.  In some respects, Cargill should be more capable of weathering the effects of climate change than the farmers themselves.  There’s a chance that climate change will lead geographically feasible regions for growing certain crops to shift to higher latitudes [4].  While extremely inconvenient, Cargill may be able to identify farmers in those higher latitudes who can produce the crops.  However, many of the farmers themselves wouldn’t have the mobility to move to a new location if climate change severely impacted the yields of their farms.  For the sake of all parties involved, Cargill must try to convince their farming partners that full-throated support for climate change activism is the best long-range strategy to ensure the survival of their business.  Additionally, ceasing donations to politicians whose beliefs are incongruent with this stance would help build the image of Cargill as a true leader in the fight against climate change.

Cargill’s precarious position in the climate change debate shows that a company’s position on this issue can’t always be categorized in black and white terms.  Today the company occupies a very grey area between activist and holdout.  Here’s to hoping that they can find the courage to embrace a long-term view rather than letting short-term profit concerns determine their path on this issue which will ultimately shape the industry’s future.  (728 words)

 

[1] Burt Helm, “Climate Change’s Bottom Line,” New York Times, January 31, 2015, http://www.nytimes.com/2015/02/01/business/energy-environment/climate-changes-bottom-line.html?_r=0, accessed November 3, 2016.

[2] Cargill, “At a Glance,” http://www.cargill.com/company/glance/index.jsp, accessed November 3, 2016.

[3] Jacob Bunge, “Cargill’s Food Empire Adapts to a Changing World,” The Wall Street Journal, October 16, 2016, http://www.wsj.com/articles/cargills-food-empire-adapts-to-a-changing-world-1476670081, accessed November 3, 2016.

[4] Cargill, “What are the implications of climate change for agriculture and Cargill?” http://www.cargill.com/news/issues/food-security/climate-change/index.jsp, accessed November 3, 2016.

[5] Alicia Mundy, “’Risky Business’ Report Aims to Frame Climate Change as Economic Issue,” The Wall Street Journal, June 23, 2014, http://www.wsj.com/articles/risky-business-report-aims-to-frame-climate-change-as-economic-issue-1403578637, accessed November 3, 2016.

[6] Risky Business, “About Us,” http://riskybusiness.org/about/, accessed November 3, 2016.

[7] Nathanael Johnson, “Food giants Cargill and General Mills believe in Climate change. Will they defend themselves from it?”, Grist, October 23, 2014, http://grist.org/food/food-giants-cargill-and-general-mills-believe-in-climate-change-will-they-defend-themselves-from-it/, accessed November 3, 2016.

[8] Robert Holly, “Report: Cargill backs climate change deniers despite pledge,” Midwest Center for Investigative Reporting, October 10, 2016, http://investigatemidwest.org/2016/10/10/report-cargill-backs-climate-change-deniers-despite-pledge/, accessed November 3, 2016.

 

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Tom Vandyck, “How to Secure the Global Food System in a Time of Climate Change,” Forbes, February 15, 2016, http://www.forbes.com/sites/cargill/2016/02/15/food-security-in-a-time-of-climate-change/#6e2f0b542531, accessed November 3, 2016.

 

 

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2 thoughts on “Cargill Finds Itself Stuck Between Climate Change Activism and Denial

  1. PD – I would add that Cargill also needs to place a larger emphasis on supply chain controls. [1] Cargill recently came under criticism for purchasing soya through suppliers that engaged in the destruction of the Amazon and the company has since enacted a deforestation prevention initiative. [2] We learned from our case reading that changing land use and management is one of three actions required for reducing carbon emissions. The firm should put this initiative front and center in its sustainability program.

    [1] Rainforest Action Network, “The Problem with Cargill,” http://www.ran.org/problem-cargill-0#main-content, accessed November 7, 2016.
    [2] Guardian Weekly, “From the Amazon to Chicken Nuggets,” https://www.theguardian.com/guardianweekly/story/0,,1752430,00.html, accessed November 7, 2016.

  2. Great post!

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