A sweet defeat?

25.03.2013

Monday’s news from New York puts the topic of corporate responsibility and food back on the agenda. One of Mayor Bloomberg’s flagship projects, the ban to sell soda or sugary drinks in larger than 16oz (0.47 litres) servings was blocked by the Manhattan Supreme Court – just one day before it was supposed to go into effect.

It puts an interesting spin on the debate on corporate responsibility of the food industry, which was a recent topic on our blog. Former business tycoon Bloomberg - in a rather non-business friendly manner – is obviously a strong believer in harsh, imperative, top-down governmental regulation when it comes to responsible business behavior. Whether this is just because he knows business in and out is an interesting question...

Be that as it may, resorting to strict regulation in this area has always been more of a European approach – as the fallout from the horse meat scandal in the EU now also seems to suggest. Even more interesting it is now to see how differently things work out in New York. First of all, the link between the amounts of sugar in Coke, Pepsi or Dr Pepper and the ongoing obesity epidemic in the US is more than obvious. Sugar contents are clearly labeled and therefore – unlike the horse meat scandal – it has little to do with the fact that consumers are misled or otherwise shortchanged.

The unsurprising news here is that the court case was brought up by the beverage industry. For them the judgment provides ‘a sigh of relief’, as one spokesman put it. More surprising though is the fact the ban - a sentence brought down by an otherwise liberal/left leaning judge - was very much opposed by another group of rather unusual suspects: African American and Hispanic community organizations.

In some ways, this is a rather preposterous occurrence. Exactly the demographics which are hardest hit by obesity are the ones opposed to the ban (and in other US states) also against taxation and other measures to rein in on consumption behavior. Their arguments, as a lengthy analysis in The Times this week surfaced, is mostly about economic and ethical issues: they find those measures a direct discrimination of minority consumption patterns, of minority businesses (like small corner shops and bodegas) and a general overreach of government into the nitty gritty of individual decision making.

Interestingly, the soft drinks industry has discovered this ally and heavily sponsors these groups – all under the cloak of ‘community engagement’, ‘partnership’ or ‘diversity stewardship’. Of course the industry denies that their funding of these groups influences their stand on the issue; and in some ways that is credible. But we can also say that the corporate interest to back such groups on the issue of regulating sugary drinks aligns perfectly with the agenda of minority groups – which makes them prime candidates for fighting together on the same issue.

In some ways then the approach taken by PepsiCo, Coca Cola and other soft drinks companies is the epitome of cynicism; or as Kant would put it, just using people as a means to an end. But then we knew that many big corporations, despite their engagement in CSR, Citizenship or Sustainability, are still by their very set-up self-interested predators.

The New York story of this week though also shows the limits of governments in encouraging responsible corporate behavior. As one community leader put it:

“I don’t think we move the needle by legislating what people ultimately eat or drink. [,,,] Our experience has been that you educate folks, empower folks — meet them where they are, basically.”

At the end of the day, it is about changing long entrenched consumption patterns and address blatant ignorance about our food, its ingredients and its impact on our health. All these things, however, have been shaped in no small way by those very corporations for a long time. Just think of their advertising budgets or their efforts to sell their products in schools to children, just to rope them into their products and consumption habits from early age.

In some ways this leads back to Bloomberg himself. He made his billions creating an information platform which has perfected the performance measures and ability of investors to learn about the finanicial performance of companies. As long as we do not change these incentives which drive the entire system, however harsh measures which are just targeting the symptoms are not going to work. In as much one can hardly argue with outlawing to sell sugary drinks by the buckets to vulnerable consumers as a good thing – the defeat of the measures in court shows that a superficial cure of the system of food production is not the solution. In that sense this week’s ruling may also be a blessing in disguise.