Hershey Chairman James Nevels Delivers CSR Keynote Address Today at International Corporate Citizenship Conference

Hershey Chairman James Nevels Delivers CSR Keynote Address Today at International Corporate Citizenship Conference

James Nevels, Board Chairman of The Hershey Company, delivered a keynote address today titled, "Commerce & Compassion" at the International Corporate Citizenship Conference hosted by the Boston College Center for Corporate Citizenship in Phoenix, Ariz.

Mr. Nevels’ speech highlights The Hershey Company’s perspectives on Corporate Social Responsibility, focusing on the company’s innovative CocoaLink program, which brings modern technology into West African farming villages. CocoaLink is a first-of-its kind program that uses mobile technology to connect cocoa farmers with useful information about improving farming practices, farm safety, child labor, health, crop disease prevention, post-harvest production and crop marketing. Through SMS text messages delivered in their local language or English, cocoa farmers receive the information at no charge. CocoaLink represents an innovative, yet simple, way to get critical information to cocoa farmers that can have a tremendously positive impact on their livelihoods and communities, including their children.

The speech also highlights Hershey’s broader initiatives to improve cocoa communities, including the company’s recent commitment to invest $10 million in West Africa through 2017 to continue to work with experts in agriculture, community development and government to achieve progress with cocoa farmers and their families. By 2017, Hershey’s public and private partnerships will directly benefit 750,000 African cocoa farmers and more than two million people in cocoa communities across the region.

About The Hershey Company
The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate in North America and a global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey Company has operations throughout the world and more than 12,000 employees. With revenues of nearly $6 billion, Hershey offers confectionery products under more than 25 brand names, including such iconic brands as Hershey's, Reese's, Hershey's Kisses, Hershey's Bliss, Hershey's Special Dark, Kit Kat, Twizzlers, and Ice Breakers. Hershey also offers premium and artisan chocolate products under such brands as Scharffen Berger and Dagoba through the Artisan Confections Company, a wholly owned subsidiary. The company is focused on growing its presence in key international markets such as China and Mexico while continuing to build its competitive advantage in the United States and Canada.

For more than 100 years, The Hershey Company has been a leader in making a positive difference in the communities where its employees live, work and do business. Corporate Social Responsibility is an integral part of the company’s global business strategy, which includes goals and priorities focused on fair and ethical business dealings, environmental stewardship, fostering a desirable workplace for employees, and positively impacting society and local communities. Milton Hershey School, established in 1909 by the company's founder and administered by Hershey Trust Company, provides a quality education, housing, and medical care at no cost to children in social and financial need. Students of Milton Hershey School are direct beneficiaries of The Hershey Company's success.

About the International Corporate Citizenship Conference
Hosted by the Boston College Center for Corporate Citizenship, this year’s conference in Phoenix from March 25-27 is the largest-ever with more than 550 of the top corporate citizenship leaders and thinkers. The conference allows attendees to network with peers and other corporate citizenship experts; learn about the latest trends, best practices and research; listen to inspiring speakers; and leave with new tools, skills and concepts.

James Nevels is joined by other leading speakers who are addressing important themes facing business. They include:

Donald Brandt
Chairman of the Board, President and Chief Executive Officer, Pinnacle West Capital Corporation

Edward Z. Fox
Vice President and Chief Sustainability Officer, Arizona Public Service Company

Leisha John
Americas Director of Environmental Sustainability, Ernst & Young

David Jones
Global CEO, Havas

Brendan LeBlanc
Executive Director, Climate Change and Sustainability Services, Ernst &　Young

Brad Smith
General Counsel and Executive Vice President, Legal and Corporate Affairs, Microsoft

Trisa Thompson
Vice President of Corporate Responsibility, Dell

COMMERCE & COMPASSION
By:  JAMES E. NEVELS
CHAIRMAN OF THE BOARD OF DIRECTORS,
THE HERSHEY COMPANY
March 26, 2012

Good afternoon. It’s great to be here in Phoenix. I’ve looked forward to this trip during the long Philadelphia winter.

Thank you very much for that kind introduction. Target is a world-class retailer and its 5% pledge is an extraordinary commitment by their shoppers and employees to their communities.

And thank you to the Boston College Center for Corporate Citizenship for hosting this outstanding program and for inviting me to participate. The Center’s commitment to a more sustainable world is inspiring and Hershey is proud to be a part of it.  

On behalf of the 12,000 global employees of The Hershey Company it’s an honor and a pleasure for me to be here today. 

We wouldn’t be Hershey, however, without sharing some of our great treats.  So I do hope you are enjoying the samples we have placed on your tables.

Today, I want to share The Hershey Company’s perspective on CSR, from our home site in Pennsylvania to the distant cocoa villages in West Africa, where we source cocoa. 

I believe our story is compelling and one that says a great deal about our people and our commitment to doing the right thing. It’s also a very personal story for me and one that has a strong impact on me as an African American.

I’d like to also mention that my friend, JP Bilbrey, who is Hershey’s CEO, has just returned from West Africa, where he opened our first ever demonstration farm called Hershey Learn to Grow. JP only recently assumed his new position and his trip to West Africa demonstrates how important our leadership team views social responsibility both at home and abroad.

Here’s how I would like to tell my story today:

• First, a few thoughts on my personal business philosophy. Let me start from inside the Board Room. CSR is indeed a part of the conversation. A critical part. So I believe each business leader, and specifically a board member, needs to bring his or her values into the board room. 

• Second, the team at Hershey helped frame a major business problem and a major CSR issue. The two are clearly interrelated like so many business issues in today's world. Specifically where and how we will continue to obtain cocoa for our chocolate products, which are growing in popularity around the world.  And -- how do we help farmers and farming communities live better lives.

The program I will be telling you about is called CocoaLink because it brings modern technology – cell phones – into the farming villages. What’s interesting to me about CocoaLink is that it is the kind of program our founder, Milton S. Hershey, would have promoted.  After all, he built a second model community called Hershey Cuba.  CocoaLink is entrepreneurial and innovative, business focused and good for the community. 

• And third, I am not going to pretend that the Hershey way is the only way to approach CSR.  It’s our story, not a template for all companies.  Each of us in this room can learn from each other.  For CSR to be relevant to your organization, it has to reflect the spirit, culture and personality of your company – your products and services, customers and employees. 

Another speaker at the BCC Conference will be David Jones, whose new book, Who Cares, Wins, tells why good business is better business. As he put it so well,

“There are massive shifts taking place as the social consumer demands that business becomes more socially responsible. 86% of consumers said that they believe companies need to stand for more than just profit… and they will punish those businesses they view as irresponsible.”

I very much look forward to your questions, once my remarks are completed.

First, a little on bit on my business philosophy and what I bring to the board at The Hershey Company. 

After three decades of working in business and seeing all kinds of organizations, I know that companies are really driven by a collection of their people.  It’s not the Hershey SEC Proxy that tells the Hershey story; rather, it’s what our 12,000 people do each day that matters most.

Everyone from our associates in our manufacturing plants, to our customer- and consumer-facing sales people, to our management, to our outside board members, must have a value system that is consistent with what we stand for as a company. 

We are all contributors to Hershey’s success, and must be good – no, great – ambassadors for our brands. Just like Milton Hershey was.

As to my values and beliefs, one of my earliest business lessons came when I was about five years old, growing up in Alabama.  My parents were 15 when I was born, so as a consequence, I was pretty much raised by my grandparents.  And it was my grandfather, who made his living as a nickel-a-week salesman of burial insurance policies, who taught me early ethical principles.

Picture my grandfather on Sundays in Birmingham, Alabama, at our church, collecting five cents per week from his clients.  This was after the collection plate went around.  Now, I wasn’t there just watching.  My grandfather put me to work and gave me the task of marking down each client’s nickel into the payment book.

Besides not wanting to make any mistakes, what did I learn from him?  The lessons, which I apply to The Hershey Company and my own investment advisory firm, The Swarthmore Group, are quite basic:

Number one:  Never ask someone to do something you would not do yourself.

Number two:  Tell the truth to your clients.  If you do lie, you’ll have a helluva time remembering what you told them if you didn’t tell them the truth to begin with.

And number three: Provide value in all shapes and forms.  In Birmingham, or Hershey or Philadelphia, Pennsylvania or here in Arizona, I believe it means:

                Be a good neighbor,

                be a responsible business person,

                be an individual who cares about those around them. 

One more admonition from my grandfather:  You do well by doing good.  Milton Hershey described this as commerce with compassion.

You’re probably saying that this sounds remarkably like the Golden Rule.  Yes it does.  And there’s a good reason it’s called the Golden Rule.  It’s valuable, and stands the test of time.  For my grandfather this saying was more than a few simple truths. I saw him apply them in action.

You might also think that these are good sentiments for a consumer goods company like Hershey, but they don’t apply as much to the world of capital and finance in my positions as chairman of an investment advisory firm and as a governor on the board of the Philadelphia Federal Reserve Board.

Let’s be clear, the Swarthmore Group was not set up like the Calvert Group, a mutual fund organization that is primarily charged with investing in socially responsible projects and companies. 

But make no mistake about it; our team has a very specific set of core principles.  Our clients are corporations, endowments, pension funds. And since we opened our doors in 1992, we treat each of our client’s funds as if they were our own.  We’re also very clear with clients that we have a long term approach towards investing and don’t try to time the market.  We are not the firm for all investors and my partners and I are very comfortable with this approach.

A commitment to social responsibility is also fundamental to the business of the Philadelphia Federal Reserve.  We’re one of the 12 regional reserve banks that have the same general role as the US Federal Reserve Bank, in Washington, Chaired by Mr. Ben Bernanke.  The Federal Reserve has two roles: To promote full employment and to keep inflation under control.

You don’t do this job in a vacuum.  Chairman Bernanke goes out of his way to understand that monetary policy impacts real people, real jobs and real hopes.

So, what links these diverse organizations is a desire to be relevant, be of service and be sustainable.

Let me fast-forward from what I learned as a young boy and my business career to my work at The Hershey Company.

You may not know that each time you buy a Hershey’s candy bar, a Reese’s cup, Hershey’s Kisses or Twizzlers, you are actually doing a little bit of good. Let’s look at how our consumers see our brands on TV.

[Hershey Advertising Video]

I hope you liked those as much as I do.

The story behind those brands is even more interesting. Why?  Because a percentage of each product we sell goes to support The Milton Hershey School, one of the most remarkable institutions with which I’ve ever been involved.

The company founders, Milton and Catherine Hershey, never had children of their own.  And in 1909, 103 years ago, they decided to devote the wealth they earned from the chocolate company to create the Milton Hershey School, a home and school for what were then called orphaned boys.  Every shareholder of the company knows that a portion of the profits helps keep the school going in perpetuity.

Today, after 103 years of continuous operations, the Milton Hershey School is a living embodiment of Milton Hershey’s dedication to nurturing young students in need, into productive, caring adults.  The modern School is a cost-free, private coeducational home and school for racially diverse children from families of low income, limited resources and social need. 

It is one of the largest residential K through12 schools in the world.

Milton Hershey School currently has 1,800 students and is located nearby Hershey’s headquarters. The school covers every cost associated with tuition, healthcare, housing, clothing, and transportation. That works out to be about 75,000 per student, per year.  It’s worth every penny and then some.  Moreover qualifying students can receive full scholarships.

I could spend my entire time today, talking about this gift from Mr. and Mrs. Hershey as the ultimate CSR story.  But the point I want to make is that five-score-and-three-years ago, Mr. Hershey believed it was critical to do the right thing and to give back to our Pennsylvania community.

Let’s take a closer look at Milton Hershey School in this TV ad.

[Show Milton Hershey School :60 TV ad] 

With the Milton Hershey School as backdrop, it’s not a big leap to suggest that The Hershey Company should contribute to other communities, such as farmers in Ghana who grow the cocoa beans that are the key ingredients in all of our delicious chocolate products.

For more than a century we have sourcing cocoa beans from a narrow band along the equator for Hershey chocolate products. While farming practices and communities differ greatly, region by region, it is also true that most cocoa farmers live in what we would describe as impoverished conditions.

Cocoa is their cash crop. Cocoa will help them buy uniforms for their young school children. And yet, as many of you know, companies like Hershey face continuing scrutiny about the issue of child labor on cocoa farms, particularly in West Africa. 

The Hershey Company, in tandem with our industry association, has been tackling the issue for many, many years. For example, we sent teachers from Elizabethtown College in Pennsylvania to help African farm communities in the 1960s. But it’s clear to all of us that much more needs to be done. After all, if this were an easy issue to resolve, we would have done so by now.  

We are continuing to invest in new approaches and innovations delivered through outstanding partners. Earlier this year Hershey announced a $10 million commitment to West Africa through 2017. We announced targets of directly impacting 750,000 farmers and over two million community members. To understand how we plan to do that, we need to understand the heart of this problem.

The problem is that the cocoa farming industry is not the same as what we know as agri-business. In Ghana alone, there are 700,000 cocoa farmers involved in growing cocoa beans. There is no big corporate entity or even a large collective that can make rules – and enforce them – about who can work on farms and how much they can and will be paid.

So while that issue continues to percolate, The Hershey Company has looked at other ways in which we can help improve the lives of farmers and families in the region. 

There’s another important business fact that also impacts our plans. 

The fact is that the world loves Chocolate and chocolate products and Hershey products in particular. The global demand continues to escalate by 3-4% a year.  We are seeing some of our biggest growth in China, India, Mexico and Brazil.

How many of you have lived or traveled in West Africa? Let me see a show of hands.

For those who have not, picture large swaths of land with literally hundreds of thousands of small cocoa farms in the region. And if you never knew, the delicious chocolate we love starts as a large fruit, or a pod, that grows on a cocoa tree. The pods are harvested, split open to extract the beans that are eventually processed into the end product of chocolate.

In this part of the world, the daily information flow that we take for granted in our business and personal lives, is simply not available. Villages are isolated by bad roads and cut off during rainy seasons. A farmer may see an agricultural extension agent once a year, if he is fortunate. As a result, most cocoa farmers use the same growing practices as their grandfathers. Farming has not been modernized and the farmer and his family have not seen their incomes increased.

The cocoa farmers in West Africa, for a variety of reasons, do not produce as much cocoa per acre of farm land, as do farmers in Malaysia and Indonesia. I believe it’s a shared interest – for the farmers and Hershey – to help increase the crop yields.  

For farmers to learn anything more than what their neighbor knows – such as information about an insect that is attacking trees in another part of the country, or about an irrigation technique that other farmers 100 miles away have used successfully – they would have to either go to a local market or wait for slow-moving word of mouth. 

Yet surprisingly, due to the growth of wireless technology, there is wide penetration of cell phone coverage in rural Ghana. This is a game changer.

Many of these same farmers – who may not be able to read or haven’t traveled more than 50 kilometers from their homes -- have access to cell phones. Cell phone coverage is about 85 percent of the country. By the way, I didn’t say all of the farmers have cell phones.  In some areas, there may be one or two cell phones, but 10 different people who have a sim card can use a neighbor’s phone.

Now that we have started CocoaLink- Connecting Cocoa Communities -- it seems like an obvious CSR effort. Actually starting this program was a big leap of faith for us and our partners – The Ghana Cocoa Board (known as COCOBOD); the World Cocoa Foundation.  We did not know whether the farmers would embrace CocoaLink.

It’s also one of those programs that could not have happened until the right elements came into place. It started with an “aha” moment of one of our Hershey employees who was traveling in the region. That gentleman is Andy McCormick, Hershey’s Vice President of Public Affairs [gesture toward Andy if possible].

He noticed the number of people using cell phones, and hatched an idea that evolved into the CocoaLink project.

The idea is quite simple: Utilize what is becoming almost ubiquitous technology to provide farmers with information that will help them with yields, crop disease prevention, market and weather news, and information on laws and regulations. 

While Hershey is an initial funding sponsor of this program, we’re leaving the implementation of the program to Ghanaian local experts. The Cocoa Research Council of Ghana is the major content provider, and we’re getting technical support from one of the leading wireless providers. 

I believe that this is proof of a CSR program that works. In our case, it started with three partners, but we’ve now attracted other organizations that see the value.  We are collaborating with the existing U.S. Aid program; a Ghanaian NGO with extensive presence in the country; and the US Peace Corps to spread the word and teach farmers how to work with the technology.

We have built in sustainability principles from the start. Within three years of the first message being delivered to farmers, the program will become part of the Ghana Cocoa Board. In other words, Hershey and the World Cocoa Foundation will exit and CocoaLink will be owned and operated by the Ghanaians.

So how does CocoaLink work?  We started about 16 months ago with a pilot program in 15 communities covering about 8,000 farmers.  Ultimately, we think we can reach 100,000 farmers in about three years.

Signing up is easy.  All a farmer needs to do is send a free, simple short text message to the CocoaLink site.  CocoaLink is promoting the program through signage and information kiosks at local cocoa markets. 

Once a farmer signs up, information will be sent by text and voice messages in local languages and English to subscribers.  

Farmers can send questions into CocoaLink by text or voice.  And farmers can use the phones for other purposes. 

One mother in a village told us that she is now using her phone to keep in touch with teachers at a local school.  Anecdotes are fine, but we have real metrics we’ll use to measure the effectiveness of the program.  These metrics include literacy training, cocoa quality and quantity measurement, and improved farmer incomes.

I am happy to announce today that CocoaLink is on track to reach 25,000 Ghanaian farmers by the end of this year. The Hershey Company and the World Cocoa Foundation are also working to expand CocoaLink into neighboring Ivory Coast, the number one producer of cocoa beans in the world.

I can tell you that being chairman of The Hershey Company is hard work, but there are some fun parts!  For instance, I get to go to board meetings in Hershey, PA, and if I want – I get an occasional free pass for the rides at our nearby amusement park!

Setting up CocoaLink was a lot of hard work and attention to details.  But I also had the honor and privilege to travel to Ghana in 2011 when we made the public announcement of the program at the Cocoa House in the capital city of Accra.  Here is a closer look at CocoaLink and how it works.

[Cocoa Link Video]

It’s difficult to put into words how very proud I felt of my company for being part of this program.  But I was even more buoyed by the reaction of our partners on that day.  The smiles and enthusiasm from COCOBOD, other Ghanaian officials and the World Cocoa Foundation were infectious.

CocoaLink is an extraordinary project.  It’s making a difference in Ghana and that’s a primary objective.  I believe CocoaLink is making a difference at Hershey.  Our board approved it, and our program brought together an interdisciplinary team that goes beyond the board room and public affairs.  Our CSR team included Information Technology, Global Sourcing, and Government Affairs.  I wish ideas like this came to us every day.

There’s one more personal note I want to make about CocoaLink and my trip to Ghana.  This was my second trip to Africa, and while I was there I had a desire to learn a little more about my ancestors. 

We arranged a visit to what are known as slave castles.  They were built on the coast by several European nations starting in the late 1400’s.  They have innocuous names such as Elmina Castle or Cape Coast Castle. 

Make no mistake about this; these were not fairytale castles or those we associate with Europe.

These were places where traders imprisoned natives in underground storage compartments while waiting to be transported in equally inhumane ships across to the New World. 

You can Google Ghana and slave castles to see TV reports of what I saw with my own eyes. 

For me, this visit was truly an emotional roller coaster.  I walked through the slave castles knowing that’s where my ancestors trod.

I know my ancestors got on those boats and sailed across the ocean with no language other than culture.

The odds of their surviving – first the incarceration, then the journey across the Atlantic – were astonishingly slim.

Surprisingly, this visit made me proud in a way I had never been proud before.  It took me full circle. 

My ancestors had gotten on a boat – not of their free will.

I had gotten on a plane – clearly of my own free will to return to that place, and to do good.

To put it another way, the circularity of the world is only matched by the roundness of the globe.

Allow me to wrap up with a few thoughts:

As far as I’m concerned, corporate social responsibility starts and ends with individual responsibility.

The story I have shared with you today about CocoaLink is yet another manifestation of CSR that has been in place at The Hershey Company for well over a century.  It’s part of the very fabric of our organization, and will continue to be so.

Let me pose a question and to connect CocoaLink with the other issues going on in West Africa and our best efforts to solve the labor issues.  The question is this:  “Why would I want to be part of any effort that would continue to enslave my kinsmen? 

“I would not!” 

We’re working on that complex problem.

You know, it is true that business is personal. Very personal. And it should be. You are working very hard for your companies and organizations.  You know that embracing CSR means your brand will flourish and thrive in the coming decades. You also know that failure is unacceptable.

So when I look at the remarkable story of Milton Hershey, I think of my friend, Oscar. I met Oscar just once. He’s a cocoa farmer and he has a cell phone. We had something in common on that day. For me, it was the affirmation that The Hershey Company – the greatest confectionery company in the world - is investing in solutions to social problems that our consumers expect us and demand us to solve. It’s not easy and it’s not supposed to be. But like my grandfather said, “You do well by doing good.”

That’s commerce with compassion.

Thank you and I would be glad to address any of your questions.