Why Ferrero is a corporate visionary for combining business with social impact nearly 70 years ago

by Rahim Kanani | rahimkanani | Rahim Kanani Media Group, Inc
Tuesday, 20 October 2015 03:47 GMT

Ferrero is the “Confectionery Specialities Official Partner” of EXPO 2015, the current Universal Exposition being hosted by Milan, Italy, and has the theme of "Feeding the Planet, Energy for Life." At EXPO 2015, Ferrero is showcasing their social responsibility initiatives. Learn more at www.ferrerocsr.com. Photo Credit: Lilia Carasciuc.

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Ferrero has always had corporate social responsibility at the core of its activities, even when the concept of CSR had yet to be invented,” explained Giovanni Ferrero, CEO of the Ferrero Group, the world's third largest confectionery company. In an in-depth interview with Ferrero, we discussed the origins and evolution of the company, all in the context of how and why they have integrated business objectives with employee wellbeing, social responsibility and corporate citizenship. 

As readers will learn, Ferrero stands at the tip of the spear in terms of their pioneering commitment from the very beginning to fusing principles of business and society together into one harmonious strategy.

Tell me a little bit about the values, ethos and mission of the Ferrero company when it was founded nearly 70 years ago.

We often say that Ferrero has had corporate social responsibility in its DNA because it started to develop an ethical approach to business from the very beginning. A clear example of this approach was the way in which, after WW2, my dad and my grandfather handled the relationship with the farmers in the countryside, who inevitably became the company’s main workforce. 

Almost everywhere in Italy, farmers were forced to leave their fields to go to work in the factories of the big cities. This fact created a dramatic fracture between cities and countryside, with the latter often ending up abandoned and impoverished. In the “Langhe”, in Piedmont, this did not happen. Fully aware of such risk, Ferrero organized a minibus service that would pick up the farmers from their homes to drive them to the factory in Alba and take them back home at the end of the work shift. This way, the farmers managed to develop their small plots of land, which gradually became more and more prosperous, thanks to the new financial resources earned in the factory. 

In the early ‘50s, the Langhe were regarded as a “depressed area”. Now they are one the most thriving areas in Italy, which was recently named aUNESCO World Heritage Site.

Our philosophy has always been based on mutual satisfaction between company leaders and workers. If a workman has a sustainable life and earns enough to feed his family without running the risk of being fired at the first crisis, he will do the utmost to ensure the success of the company. It is worth reminding readers what my dad wrote to the personnel when he inherited the company from his father, Pietro Ferrero, in 1952: “I will have fulfilled my mission only when I will have managed, with tangible solid facts, to guarantee to you and your children a safe and serene future”. A promise fully kept. In seventy years, in the Alba plant, nobody has ever been fired for overstaffing or redundancy and there has never been a single hour of strike against the company. 

Over the years, how has Ferrero committed itself to principles of community, being a responsible corporate citizen, and philanthropy?

As I said earlier, Ferrero has always had corporate social responsibility at the core of its activities, even when the concept of CSR had yet to be invented. For instance, way back in 1961, Ferrero organized a conference on social matters entitled “The adaptation of man to work and industry” in order to acknowledge the problems of the workers in the factory and find the best solutions. In 1983, we created the Ferrero Foundation of Alba, an architectural complex dedicated to 3,300 retired employees and to their families. This complex meets the needs of the retired workers with entertainment venues, workshops, a library, a multipurpose auditorium, gyms to keep fit, exhibition halls, facilitiesfor medical clinics and a modern nursery. Under the motto “Work, create, donate”, the Foundation carries out social and cultural activities available for all former Ferrero workers under the careful and passionate supervision of my mother, Maria Franca Ferrero.

Another crucial pillar of our social responsibility was the creation of our social enterprises in poor areas of India, Cameroon and South Africa, which have two main objectives: the creation of new jobs and the implementation of projects and initiatives of a social and humanitarian nature dedicated to safeguarding the health, education and social development of children and teenagers. 

Finally, I am very proud of our Kinder + Sport program, aimed at fighting childhood obesity. In the last few years, there is a growing and unjustified media campaign against sugar, which a few questionable scientists regard as the main cause of the obesity “epidemic”. Any honest and rigorous nutritionist, however, agrees that obesity is mainly caused by overeating and physical inactivity. So, we have decided to encourage children and teenagers to practice sports, in a serious educational program that promotes active lifestyles. This program involves 27 countries and nearly four million children.

What would you say are some of the biggest challenges to sourcing raw materials sustainably?

The selection of raw materials by Ferrero is regulated by two main principles: excellence in quality and full respect for human rights and sustainability. We have established an ambitious set of goals in order to have all of our ingredients from sustainable sources by 2020, without any compromise. Quite a few of them have already been achieved, such as for coffee, milk and palm oil.

Even organizations such as Greenpeace say that Ferrero is “a model” in terms of respect of nature and defines our company as “transparent and responsible” for having been one of the first to decide to use only palm oil that does not contribute to deforestation. 

At the same time, what would you point to as your most important milestone of success to date?

The most important aspect of Ferrero’s evolution through the years is that our revenue has grown steadily, and this was true even during the financial crisis that wiped out many other companies. Most recently, we have become the third leading Group in the world in the field of confectionery. I believe that the main reason for this success is that we never bite off more than we can chew. We do not believe that entering the stock market would suit our business. If you have stakeholders whose main interest is to achieve quick profits, it is difficult to implement long term plans or to test a product properly.

As more and more corporations are integrating principles of responsibility and sustainability directly into their core operations--rather than pursuing an individual corporate philanthropy arm or "CSR" unit--Ferrero seems to have had this critical integration from the beginning. What are some of the leadership lessons you've learned in terms of why this integration has been so successful?

The main lesson is that the factory must be at the service of men and women, and not vice versa. This great attention to the employees’ needs, to their families, to their life even when they stop working, cements an extraordinary social cohesion that helps both sides.

I will never forget the way our workers reacted in 1994, when the river Tanaro flooded the factory in Alba with mud and debris, putting at risk the machinery and all the Christmas production. Hundreds of employees spontaneously reached the plant with brooms or any other tool they could find to shovel it all away. Some of them had even their own home flooded but first decided to save their workplace! I strongly believe that if we had not created such a strong relationship with our employees, that little miracle would not have been possible.

Learn more about Ferrero's CSR initiatives here.

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