How Social Sustainability Makes Good Business

How Social Sustainability Makes Good Business

          
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Florida Ice & Farm’s CEO on How Social Sustainability Makes Good Business

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  • In This Video
    Ramon Mendiola

    Education

    1993, Master’s degree in business administration, Kellogg School of Management



    1986, Bachelor’s degree, Babson College

    Career Highlights

    2003–present, CEO, Florida Ice & Farm Company



    2000–2003, vice president for Central America and the Caribbean, Kraft Foods International



    1993–2000, general manager for Central America, Philip Morris International

    Outside Activities

    Board member, Philip Morris International, Costa Rica



    Board member, El Gallito Industrial



    Member, Young Presidents’ Organization

     

    Ramon Mendiola has been CEO of Costa Rica’s Florida Ice & Farm since 2003. A leading producer and distributor of beverages, the company made a visionary decision in 2008 to merge the company’s economic and financial objectives with its social and environmental objectives and create a “triple bottom line” strategy. While most of the attention the company has received has been for its environmental achievements, social goals have been equally important. In an interview with Subramanian Rangan, a professor at INSEAD, Mendiola explains why working proactively on the social and environmental dimensions of the business—even if it sacrifices short-term sales—can still make business sense and create a competitive advantage in the medium and long term.

    There's been a lot of interest in what you've been doing at Florida Ice, especially in terms of reconciling economic performance with sustainable performance.

    Back in 2008, we made a strategic decision to merge our business strategy with our corporate social responsibility, and in the process we established a dialogue with our stakeholders. And they told us three things that were very important. As you know, in our portfolio we have alcohol-related products like beer, and our stakeholders told us that we need to address excessive alcohol consumption. They also were very interested in doing something about waste and about our high consumption of water. We were fully convinced that if we wanted to have a sustainable company and gain a competitive advantage, we needed to incorporate those elements into our strategy.

    In Costa Rica, which is not an exception in Latin America, 70 percent of the consumption of alcohol products happens during the weekend. Now, changing consumption patterns is not easy. It takes time. You have to put the resources behind it and you have to believe that you can really change it. We want to continue growing our per-capita beer consumption. But we must do it in a responsible manner.

    Has your beer business grown since you started promoting this more sustainable, more responsible consumption pattern?

    It is continuing to grow, and even a bit beyond the population growth rate.

    Would it have grown even faster if you had not promoted moderation?

    Probably yes.

    So you made a short-term/long-term tradeoff. What is the business logic here, or is there strictly an ethical or social logic?

    I believe that society will judge us according to how we're addressing the excessive consumption. We had to be proactive in addressing this topic. Otherwise, there would be stringent legislation that would dictate the rules. In this sense, the industry has to be seen as part of the solution. The important thing here is, What do you do about it? How do we engage? How does the private sector work together with the government, NGOs, and society? How can all of us work together?

    Why make it so complicated? Why not just do it by yourself? It's hard enough to do things by yourself, and you’re creating this ecosystem to mobilize. That's very challenging.

    In our society we have too many issues, too many problems. I believe our governments, at least in Latin America and maybe in Europe as well, cannot possibly resolve all of them. Other than complaining, what can the private sector do to help the government solve some of these issues, using or leveraging our competencies? We can contribute many of these competencies, other than resources.

    To put it crudely, can you monetize this sustainability work?

    I’ll tell you my straight-up answer. If we don't act proactively, we will allow the regulators to impose high tariffs or duties or restrictions on our business. That will make things worse for the company in general. And not only us, but any industry. I think if you actively pursue those initiatives in which you can find common ground…You're always going to have radical positions and some more conservative positions. The trick here is to find common ground, so we can contribute to what we believe is the right thing to do and also have legislation that is reasonable and just.

    What's been the response in the industry, from the competition?

    Absolutely fantastic.

    Why would they want to join you, and is it necessary that they join you?

    Well, they know that if they don't follow that path, companies like ours will face limits on our selection of strategic suppliers. The world is demanding that we do things differently. I want to have my suppliers reduce their environmental footprint so that I have less of a footprint. The other very important thing is for them to be forward looking with our clients and consumers.

    You've been learning from many organizations and your partners, and competitors must also be thinking about one or two or three things. What has been really attracting them about what you’ve done?

    Over the past years, we have linked the remuneration of our executives and employees to compliance on the three dimensions: economic, social, and environmental. I believe when you touch the wallet of your executives and your employees, people will listen, people will do things, they will move the needle.

    We haven't talked about consumers, but in the end, they are a very important factor. Why do we do this? Why do you want to have a more sustainable business going forward? Our research is telling us that in the end, consumers will not be willing to pay a premium price for a product because it is sustainable. But I think that given more or less equal prices, they will choose your product if they know that you are responsible regarding the environmental, the ethical, and the social.

    What is the level of fatigue among the employees at Florida Ice? Are they tired? Or are they even more energized? Do they feel they've been there, done that, and now what's the next thing?

    No fatigue at all, actually.

    How fatigued do you feel?

    I'm every day more energized, more pleased because we now have, over the past three or four years that we've putting this into practice, tangible results. Things that we can measure, so we can see how we’ve been advancing on this front. This is very important because if you don't show results, people get frustrated.

    If you have results through these efforts, it is natural to have pride.

    There is no price for it. And we cannot have a successful company in a failed society. I see it in my kids every day, and I want to leave a better society for them. But more than leaving a better society is for them to have an example from the private sector. If they choose to go into the private sector, we can together, along with the government, along with the NGOs, we can build a better society for all of us.

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