You are hereby cordially invited to the MSc thesis presentation by Folake Kareem on ‘Agri-business on a mission impossible. Exploratory Study of the Due Diligence Process Implementation by Agri-food Multinational Corporations’.
Supervisor: Otto Hospes
Examinor: Katrien Termeer
Date: 23.3.2022
Time: 14-15.30 hours CET
MS Teams link: Click here to join the meeting (there is a limited number of spaces in room 2047, Leeuwenborch; please consult Otto Hospes)
Title: Agri-business on a mission impossible. Exploratory Study of the Due Diligence Process Implementation by Agri-food Multinational Corporations
Abstract The Organization for Economic Co-operation and Development (OECD) has developed due diligence guidelines to promote sustainable development goals for responsible business conduct in production and supplier's tiers upgrading (OECD/FAO, 2015). This thesis explores how agri-food multinational corporations (MNCs) implement the six steps of the due diligence process given the complexity of Global Value Chains (GVCs) at the upstream (production) part and to understand how agri-food MNCs organize corporate accountability across their GVCs about these practices. Very little research has specifically and systematically explored how agri-food MNCs practice due diligence six steps and compliance within their GVCs. To address this knowledge gap, different methods were used to collect data: a scientific literature study, document analysis of the three selected agri-food MNCs (Unilever, Olam, Cargill), and experts’ interviews. The expert interviews have been the main data source for the result analysis.
The first main conclusion of this study is that implementing the due diligence six steps practice is a mission impossible. Agri-food MNCs partially practice the due diligence process due to financial and administrative burdens they struggle with. The three selected agri-food MNCs have boldly accepted to implement the DD six steps, though they employed different approaches in practicing the DD process.
The second main conclusion is that implementing all the six due diligence steps is not possible for agri-food MNCs because they only influence the outsourcing link through their bargaining model, revealing that they do not fully control their GVCs. In the local context, the middlemen do not share the right information within the upstream part of the GVCs. The suppliers and Agri-food MNC's (stakeholder's) relationship solely depends on contracts and contributing factors like the national standards of their business location, suppliers' magnitude, and the corporation's shareholder's influence. Since transparency is a decisive factor in evaluating GVC's coordination, agri-food MNCs are not fully transparent about how they implement the due diligence process in their GVCs. For reputational sake, some corporations try to employ Non-Governmental Organizations (NGOs) to get the required information from their suppliers.
Two corporate accountability dimensions were analysed to explore how agri-food MNCs organize accountability, which are answerability and enforceability. Findings reveal that agri-food MNCs are only answerable to their shareholders or investors and concerned about their reputation if and when activistic NGOs call them out. Also, there is a lack of enforcement mechanism because agri-food MNCs perceived due diligence six steps as a norm. There are no sanctions for non-compliance. This means that the level playing field between the agri-food corporations globally is hard to create.
Keywords: global value chains; responsible business conduct; due diligence; corporate accountability; agri-food multinational corporations.