This week the United States Department of State honored three private companies for their role abroad as “good corporate citizens.” Cargill, the Minnesota-based animal feed company, took home the Secretary of State’s 2015 Award for Corporate Excellence, in recognition of the company’s work building 76 schools in Vietnam.
“It was nice to be recognized, because [we’re] a big food company and we’re privately owned. We don’t have consumer brands, we’re not well known, and I think sometimes people default to, well if I have haven’t heard of you, something bad must be happening,” Dave MacLennan, Cargill’s CEO, told Devex.
Cargill employs 150,000 people in 70 countries, and last year celebrated its 150th anniversary and reported more than $120 billion in revenue. It is one of the largest agriculture companies in the world — and an increasingly active player on the global development scene.
MacLennan spoke with Devex about the role development partnerships play in Cargill’s business model, how he pushes his colleagues — and board of directors — to prioritize sustainability alongside earnings, and how the U.S. government could be a better development partner to the private sector.
Here are the highlights of our conversation with MacLennan:
We hear so much about this transition from traditional corporate social responsibility towards a shared-value framework. Do you consider that work to be core to your business, or are these efforts still of greater value to your brand identity than they are to your bottom line?
I think they’re core to the business. They are and will continue to be incorporated into the way we think about our strategy. They’re inseparable. If you’re going to do well, meaning succeed commercially, you have to do good. One of the great moments in Cargill Vietnam history is … a senior [government] official called us “the school company.” What we are is we’re an animal feed company … but his mnemonic device was, “oh yeah, they’re the ones that build the schools.”
We’re a guest in these countries. We’re in 70 countries around the world … and you need to act like a guest. You need to respect the culture, respect the customs, respect the environment and invest in all three … One of the shareholders said to me, when you approve an investment, you should have a component ... that measures how sustainability contributes to our returns. To me that was a very clear expectation from the owners — it should be baked into your business model.
For many of these sustainability initiatives — building a school, for example — the time horizon is longer than a quarterly report. The metrics are different. How do you get your board to care about sustainability, and to prioritize sustainable development outcomes relative to the metrics you track in an earnings report?
One of our seven guiding principles talks about respecting the environment and respecting the planet. It’s part of the culture. [For] the board of directors that are not family shareholders … I think it’s how you talk about it in the boardroom, how you present it as part of your business model, and how you convey to them that this is part of our strategy, and it’s not branding, it’s not PR, it’s not just CSR, it is part of your DNA.
It’s tougher to measure the returns. How do we know that because we’ve built 76 schools, we’re more successful in Vietnam than we would have been if we hadn’t? The easy answer is I just know that’s true. I really believe it to be true. Well, how much of your profits are because of that? I don’t know. That’s hard to measure. But if nothing else, I just believe we wouldn’t have 1,400 employees, 14 locations, we wouldn’t be who we are in Vietnam without the combination of business strategy and social responsibility. But it’s harder to measure and it takes longer term to pay off.
Do you get pushback, or is there broad buy-in across Cargill?
Do I get pushback? Yeah. Let’s say with deforestation. We’re a party to the soy moratorium in Brazil, and we want to take that further. We signed the [United Nations] pledge on deforestation. Some of our business leaders say, you don’t know how expensive this is going to be. I don’t say I don’t care. My job is to care about expenses and profitability. But my view is, you know what, it may be short term expensive, or it may be short term capital intensive, but ultimately it will make us more successful … I’m not going to let somebody push back and say I can’t afford to do this. Yes we can.
What is one thing the U.S. government could do to improve the effectiveness of its development partnerships with the private sector?
Recognizing that the private sector is what the world sees ... when it’s forming its opinion about the United States ... We’re doing good things. I think the mentality is there, but I think promotion and active and visible support like today of what we’re doing, I think that gets the message out, and I think that’s good for business and good for the country.
What if I narrow the question to agriculture? If you look at Feed the Future, for example, do you feel confident in the general thrust of that initiative, or is there something you would point to and say, we could do more, if…?
I’ll be honest with you, I don’t know a lot about Feed the Future. A lot of our partnerships around the world are with NGOs … like with Nature Conservancy we’re very active, World Wildlife Fund, Technoserve, the [Bill & Melinda Gates Foundation] with farmer education. We have a lot of good and successful relationships with NGOs and with private sector foundations and organizations. What it points to is: we can’t do it by ourselves … Whether it’s an NGO, another private sector foundation, or the U.S. government, we want the partnership.
What do you say to people who are suspicious that companies like Cargill partner with agencies like USAID or the nongovernmental organizations you mentioned, not solely to improve global food security, but to exert influence over an agricultural policy?
You know, my instinctive reaction is to say, “that’s not true.” But that’s an inadequate explanation. The best approach … is to be transparent, to let the world know who we are and what we’re doing, and as much as possible, to build trust and respect for our reputation. I recognize that because we’re big, because we happen to be privately owned, people will make certain assumptions without facts. What I say is, please take the time to get to know us.
We would never presume to be trying to influence or take over an agriculture economy. What we want to do is facilitate it to help them grow. We’ve been in business for 151 years. What can we do to teach people — here’s how you develop your agricultural economy, but we don’t have ulterior motives. For example in Zambia, we’ve educated over 100,000 farmers, and it’s basic stuff: here’s when you plant, here’s when you water, here’s how much fertilizer you need, here’s how much pesticide.
That, to me, and that, to Cargill, is what’s gratifying. Not, “oh let’s infiltrate an agriculture economy.” Let’s help a small farmer succeed, thrive, grow. Then the country can become better, the continent can become better, and that’s how you get to food security. I would say, in conclusion, food security, sustainability, farmer livelihoods, climate change, water conservation — that’s what we’re focusing on, and not the ability or some side-door entrance to take over an [agriculture] economy.
Correction: A previous version of this article incorrectly identified Cargill as a partner in the Feed the Future initiative. Cargill has supported the initiative, but is not a formal partner.
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Michael Igoe is a senior correspondent for Devex. Based in Washington, D.C., he covers U.S. foreign aid and emerging trends in international development and humanitarian policy. Michael draws on his experience as both a journalist and international development practitioner in Central Asia to develop stories from an insider's perspective.
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