After years of critical dialogue, the development organization ActionAid Denmark and the dairy company Arla Foods have reached an agreement which is meant to secure Arla´s compliance with international human rights standards when the company enters and operates in developing countries.
The agreement entails Arla’s commitment to implement a proactive human rights policy in their global operations as well as reporting on the actual and potential adverse human rights impacts of the company´s activities in accordance with the OECD’s guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
ActionAid Denmark views the agreement with Arla as an important step towards multinational enterprises taking on a more constructive and responsible role in the global marketplace.
"There is no doubt that corporations already play an important role in developing countries. This is why our organization is working hard to inspire and challenge them to take their influence seriously. In that light it is groundbreaking that Arla, the world’s fifth largest dairy company, take lead and promise to set new standards for responsibility," says Frans Mikael Jansen, secretary general of ActionAid Denmark.
The dialogue with Arla has been on-going since ActionAid Denmark pointed out the negative consequences of exporting European, subsidized powdered milk to developing countries, where the local dairy sector is still in its infancy, with the potential to develop. This issue gained added importance against the backdrop of Arla’s recently stated ambition to increase its revenue in Sub-Saharan Africa from DKK 650 million (EUR 87 M) to approximately DKK 2 billion (EUR 269 M) in 2017. The plan is to mainly increase revenue through the sale of powdered milk and UHT-milk with increased shelf life.
As a result of the dialogue with ActionAid Denmark, Arla will engage in a more systematic identification, prevention and mitigation of actual and potential unintended consequences on local farmers' business prospects and rights which may be impacted by Arla’s sales and operations.
"Arla has done well to realize that the time has come to underpin the good intentions of the company with hard data and know-how when aiming to run a globally responsible as well as profitable company. In ActionAid Denmark we are looking forward to closely following how Arla will enact this new approach, and offer our advice and guidance. The key to fighting poverty and creating global development for the benefit of everyone is a more responsible and sustainable production of food," says Frans Mikael Jansen, secretary general of ActionAid Denmark.
The key to fighting poverty and creating global development for the benefit of everyone is a more responsible and sustainable production of food
Arla's new approach involves several concrete steps:
- Human rights due diligence before and during the sale of powdered milk in developing countries in order to avoid unintended negative consequences for small-scale food producers and farmers, among others.
- Compliance with OECD’s Guidelines for Multinational Enterprises as well as the UN Guiding Principles on Business and Human Rights. This is in addition to Arla's existing guidelines for good corporate citizenship based on the UN Global Compact Principles.
- Human rights due diligence ahead of new acquisitions or joint ventures with a view to ensuring compliance with international guidelines when Arla sets out to expand its business operations in developing countries.
- An investigation into existing business activities in Côte d’Ivoire and Nigeria to identify and disclose any unintended actual or potential negative consequences for local stakeholders in those countries. Publication of the impact assessment conclusions are due on April 1st 2015 (regarding Cote d’Ivoire) and May 1st 2015 (regarding Nigeria) and Arla has undertaken to act upon the findings in accordance with the UN Guiding Principles on Business and Human Rights.
ActionAid Denmark will continue the dialogue with Arla and follow the process of identifying, preventing, mitigating and accounting for the actual and potential human rights effects of its business strategy.
We direct attention also to Arla's press release on this matter.
For more information, please contact ActionAid Denmark, Head of Press, Mikala Rørbech at +45 60 43 43 21
Danish version of this press release: MS: Dansk virksomhed kan blive forbillede i u-lande
Arla press release: Arla Foods to ensure responsible approach to African markets
ActionAid Denmark report: Milking the Poor