Barry Callebaut

1. Should the board follow Jacob’s lead and back his push for real action on sustainability?

YES, for the below reasons.

• BC has chosen a strategy to move out from B2C to B2B and this requires them to be the
leader in sourcing Cocoa
• Share prices continue to fall and profits are languished
o Cyclical YoY growth
o Last five years avg. Gross Profit Margin % 15.9% - below expectations
o Last five years avg. net income margin % 3.3% - below expectations
• A number of economic, social and environmental issues prevent the farming community
from doing their best
o Declining yield – 30 to 50% lower than potential
o Aging farmer – the average age at 50, with a life expectancy of 60
o Small-scale farming
o Inefficiencies in getting them to market
• Declining price trends
o Farmers children do not see continuing cocoa farming attractive and may give up

2. What would real action look like?

• Follow something what ITC did (eChowpal initiative in 1999) in India to turn around the soya
bean cultivation in Madhya Pradesh. They enabled the farmers with the required
information such as
o Weather reports for farming the seeds right
o Soil testing and advice
o Best practices for soya farming for resulting in higher yields
o Market price information for knowing the daily market price
o Source directly from the farmers without any middlemen
o Pay them cash on delivery which gives them the ability to invest in the next batch –
seeds, fertilizers etc. which will then increase the productivity and thus result in
increase in cashflow

These resulted in the farmers not losing interest in cultivating the soya bean, reduced the
risk of spoiled crops and increased the yield, sell at the current market price directly without
middleman.

Patagonia case study

1. Why did Patagonia switch to organic cotton, despite the costs?

Patagonia after committing 1% of sales or 10% of profits 9whichever is greater) to

environmental stewardship initiatives, commissioned a study after 5 years to study the impact it
has created. With cotton accounting for 20% of the sourced material for Patagonia, the
 chemicals used to defend cotton against pests resulted in a contaminated air, soil and water
tables causing highest rates of cancer and defects in human and wildlife population.

Switching to organic cotton resulted in Patagonia paying 300% more for cotton in 1996 than it
paid in 1995, but was expected to decrease down the line.

2. What was so different - Common threads initiative

Encouraging the first-hand user to use the garment that has a good residual life by teaching their
customers on

• How to extend the usability of clothes that were not worn or no longer fit
• How to fix damaged clothing
• By setting up a repair facility where they can get their clothes fixed

Developing a second-hand market for Patagonia’s garments that were not worn or no longer fit
– Patagonia recycled 82 ton of clothing through this initiative.

3. Assessment of the ‘Don’t buy this jacket’ campaign

• Patagonia did that with good intentions, but missed to gauge the buyer behaviour and this
resulted in the jacket selling more than their expectations.

• A possible way to address the buying behaviour could be in running specific promos on the
impact the garment industry is causing to the environment and how all of us as consumers
of this industry can contribute in a small way to minimize this impact, to enable us leave the
world better

4. What more can Patagonia do to sustain the agenda

• Create awareness at all touch points – TV, social media, online purchase and instore
purchase on the impact

• It will take some time for the results to emerge but the effort has to be sustained to see
some improvement