Environmental CSR and sustainable initiatives : the underlying mechanisms of isomorphic pressures

Environmental CSR and sustainable initiatives: the underlying

mechanisms of isomorphic pressures.

Name of author: Daphne Bijkerk Student number: 10964045 Date of submission: 24 June 2016

Qualification: MSc. Business Administration – International Management track Name of institution: University of Amsterdam

First supervisor: Lori DiVito Second supervisor: Nicco1ò Pisani

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Statement of originality

This document is written by Daphne Bijkerk who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

Corporate Social Responsibility (CSR) is a rising point on the agenda of Multinational Enterprises. All around the world managers are increasingly expected to attend to issues of corporate social and environmental responsible performances. This research studies the underlying mechanisms of isomorphic pressures influencing the implementation of CSR activities that flow from sustainability initiatives. This study focuses on the influence of coercive, normative and mimetic isomorphic pressures in practice of the FMCG industry, which has historically been a big accomplice in

deforestation. An in-depth comparative case study of two cases has been used: Nestlé and Unilever, in the context of the Roundtable for Sustainable Palm Oil, a sustainable initiative. This study aims to analyse the isomorphic pressures on the CSR practices of both firms that flow from the RSPO and understand the differences in influence of these isomorphic pressures on the institutionalization of these practices. Research was done through summative and conventional content analysis. This study links the theory on isomorphic pressures on business policies to real life CSR practices. In order to answer the main research question, this research outlines two expectations. The first research expectation states that coercive pressures will have the highest influence on the implementation of CSR activities. The second research expectation states that mimetic pressures will have the lowest influence. Results for the first research expectation were inconclusive. For Nestlé coercive pressures were mostly influencing, whereas for Unilever normative pressures had the highest influence. Mimetic pressures were least influencing for both companies.

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Table of content

2.3 Adoption of sustainability practices ... 12

3. Data and methodology ... 15

3.1 Research setting ... 15 3.1.1 FMCG industry ... 15 3.1.2 RSPO ... 15 3.2 Research methods ... 16 3.2.1 Research design ... 16 3.2.2 Case criteria ... 17 3.3 Data collection ... 19

3.4 Data Analysis method ... 20

3.4.1 Content analysis ... 20

3.4.2 Coding framework ... 21

3.5 Validity and reliability ... 23

4. Results ... 24

4.1 Within case analysis ... 24

4.1.1 Nestlé ... 24

4.1.2 Unilever ... 27

4.2 Cross case analysis ... 29

4.2.1 Quantitative results ... 29

4.2.2 Qualitative results ... 30

5. Discussion ... 31

5.1 Research question ... 32

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5.3 Limitations and further research ... 36

6. Conclusion ... 37

Appendix 1 ... 39

Appendix 2 ... 40

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1. Introduction

All around the world managers are increasingly expected to attend to issues of corporate social and environmental responsible performances (Jenkins, 2005). Also academics have an increased attention to the topic as companies are confronted with the challenge of attaining a balance between

environmental and business necessities (Clarke & Clegg, 2000).

According to Porter & Kramer (2006) external pressure from governments, activists and the media result in an unescapable priority of Corporate Social Responsibility (CSR) for business leaders. In addition, customers, employees, suppliers, community groups, and shareholders have encouraged firms to undertake additional investments in corporate social responsibility (CSR). Some of those companies gave in and devoted more resources to CSR, but other companies argued that additional investments in CSR were inconsistent with their efforts to maximize profits (McWilliams, 2000).

Profitable or not, activists believe that companies have no choice but to open their eyes to our changing planet. One of the major problems identified by NGO’s as the WWF, Greenpeace and multi-stakeholder partnerships as the Rainforest Alliance and Roundtable on Sustainable Palm Oil (RSPO) is deforestation.

Forests cover 31% of the land area on our planet. They produce vital oxygen and provide homes for people and wildlife. Many of the world’s most threatened and endangered animals live in forests, and 1.6 billion people rely on products forests offer, including food, fresh water, clothing, traditional medicine and shelter (WWF, 2015). However, the forests around the world are under threat of deforestation, which jeopardizes those benefits. WWF estimates that if current trends in

deforestation continue, up to 420 million acres of forest could be lost between 2010 and 2030. The largest deforestation fronts contain some of the richest biodiversity in the world, including large numbers of endemic species. In addition, forests play a critical role in mitigating climate change. Forests act as carbon sink – they soak up carbon dioxide that would otherwise be free in the atmosphere. WWF (2015) estimates that 15% of all greenhouse gas emissions are the result of deforestation.

7 The FMCG industry has historically been a big accomplice in deforestation. FMCG

companies use palm oil in products like shampoo, soap and cosmetics, as well as in chocolate, cookies and packaged bread. Palm oil is increasingly popular with manufacturers for several reasons—among other things, it is low in trans fats and relatively inexpensive compared to other vegetable oils. Palm oil cultivation increased from 15 million acres in 1990 to 40 million acres in 2011 (Food and Agriculture Organization of the United Nations, 2013). Demand for palm oil continues to rise. However, the majority of large FMCG players know their impact and started to make effort to cultivate palm oil sustainable with help of organizations such as the Roundtable on Sustainable Palm Oil (RSPO), governments and NGO’s.

The RSPO is a non-profit organisation that unites stakeholders of all seven sectors of the palm industry: oil palm producers, processors or traders, consumer goods manufacturers, retailers,

banks/investors, and environmental and social non-governmental organisations (NGOs), to develop and implement global standards for sustainable palm oil.

This research is an in-depth comparative case study of two cases: Nestlé and Unilever. This study aims to analyse the isomorphic pressures on their sustainability practices that flow from the RSPO and understand the differences in influence of these isomorphic pressures on the

institutionalization of these practices.

Both of these companies are large multinationals in scale and scope, with extensive global impact, what use palm oil in the products they produce and/or sell. Because of the large scale and scope of these companies, the environmental CSR policies of these firms can make a real impact.

The main research question of this study is: ‘How do isomorphic pressures influence the legitimacy of CSR practices that flow from sustainable initiatives?’

Chapter 2 provides a theoretical framework to answer this research question. This literature review ends with the research gap and two expectations. Chapter 3 describes the data & methodology and chapter 4 shows the results. This is followed by a discussion in chapter 5 and the conclusion of this research in chapter 6.

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2. Literature review

2.1 Initiatives

At the mid-1990s a number of academics started to gain interest in inter-sectoral initiatives. This resulted in an increasing number of publications on this topic. Van Huijstee, Francken and Leroy (2007) define these initiatives as: “collaborative arrangements in which actors from two or more spheres of society (state, market and civil society) are involved in a non-hierarchical process, and through which these actors strive for a sustainability goal” (Van Huijstee et al., 2007, p. 75).

In the state-centric approach of Glasbergen, Biermann & Mol (2007) governmental

organizations framed sustainable development projects. Business parties were seen as egoistic utility maximizers, who do not care about social responsibility and the environment (Glasbergen, Biermann & Mol, 2007). However, recently, business and civil society organizations also take up their share of responsibility (Leroy & Arts, 2006). This pluralistic approach (Glasbergen, Biermann & Mol, 2007) uses a more open-ended concept of sustainable development and recognizes capacities of business and organizations civil society to self-govern. Governance for sustainable development is nowadays a resolution to structure collaborations of stakeholders around sustainability issues (Glasbergen, Biermann & Mol, 2007) and initiatives are set up to solve societal problems.

The 1992 World Summit on Sustainable Development (WSSD) in Rio de Janeiro can be seen as a game changer regarding the roles of business and civil society organizations in sustainable development. At this summit, the pursuit of global sustainable development was firmly placed on the agenda. It was argued that active involvement of all the societal spheres was necessary to deal with the increasingly complex sustainability issues (Van Huijstee et al., 2007). But not only complexity of the issues demanded involvement of all societal spheres, the scope of the issues as well. Social equity, environmental health and economic health cannot be dealt with by governments alone. At the 2002 WSSD in Johannesburg initiatives were declared an important tool for the implementation of sustainable development by formalizing the link between intersectoral initiatives and sustainable development (Van Huijstee et al, 2007, p. 76; Backstrand, 2006). This study focuses on the

9 implementation of the mandates/agreements that flow from sustainable initiatives and their effect on the institutionalization of sustainability practices.

According to Backstrand (2006) multi-stakeholder initiatives are ‘voluntary, non-legislative and often geared towards implementation and joint problem solving’ (Backstrand, 2006, p. 293). Proponents of initiatives argue that these contribute to result-based governance because of the

decentralized and flexible structure and a broad spectrum of expertise (Backstrand, 2006). In situations where governments and multilateral institutions fail, initiatives can fill in the gap. However, critics point out the monitoring mechanisms and failure to live up to traditional accountability structures as the weak spots of initiatives (Backstrand, 2006). They see initiatives as the accelerators for the privatizations of global governance and rise of corporate power.

Visseren-Hamakers & Glasbergen (2007) focused specifically on the influence of initiatives in forest governance. The trend of an increase in multi-stakeholder initiatives to deal with sustainability issues can also be seen in the case of deforestation. Development of public institutional arrangements continued and in addition new forest governance in the form of public-private initiatives have emerged (Visseren-Hamakers & Glasbergen, 2007). Visseren-Hamakers & Glasbergen (2007) see businesses and civil society organizations filling the original implementation gap of governments as the most valuable contribution. Some governments are not willing or able to regulate due to lack of resources or corruption.

2.2 Institutions

The determinants of successful firm-strategies are core questions within international business literature (Peng, 2004). These questions were predominantly answered by the industry-based view (Porter, 1980) and the resource-based view (Barney, 1991). The newest paradigm is the institution-based view, institution-based on theory of the new institutionalism, which is not a substitution for the earlier paradigms, but an important addition and became the dominant frame guiding organization and management studies (North, 1991; Peng, 2002; and Peng et al., 2009; Scott, 2014). The industry-based view focuses on competitive advantage from an external perspective, whereas the resource-based view focuses on competitiveness from an internal perspective. However, none of these two

10 perspectives can explain competitive advantage completely, since firms are influenced by institutions. The institution-based view fills this gap by focusing on the design of constraints that structure

political, economic and social interaction (North, 1991). This research will draw on the institutional-based view.

According to North (1991) institutions are formal and informal constraints which define the choice set and therefore determine transaction and production cost and hence the profitability and feasibility of engaging in economic activity. Formal constraints cover laws, regulations and property rights, whereas informal constraints cover sanctions, customs, traditions and codes of conduct.

Furthermore, many studies on social sciences identify regulative, normative and cultural-cognitive elements as the vital ingredients of institutions. One approach is to see these elements as interdependent and mutually reinforcing resulting in a powerful social framework. However, Scott (2013) states that more progress can be made by differentiating these concepts and identify their different underlying assumptions, mechanisms and indicators. The regulative pillar deals with formal rules and the enforcement of these rules. The normative pillar stresses “appropriateness” of behavior in social situations and includes both norms and values. The third pillar is the cultural-cognitive pillar, which is based on the shared conceptions of beliefs and values that are taken for granted. According to Scott (2013) each of the three pillars provides a different basis of legitimacy. The corresponding mechanisms to the three pillars differ as well, and Scott (2013) uses the typology on isomorphism by DiMaggio and Powell (1983). These are respectively coercive, normative and mimetic mechanisms.

Structural change today is less driven by competition or the need for efficiency. Instead, bureaucracy and other forms of organizational change occur as the result of processes that make organizations more similar without necessarily making them more efficient. DiMaggio and Powell (1983) argue that the more organizations seek to be legitimate and credible, the more they are becoming more homogeneous. The best concept that captures the process of homogenization is isomorphism (DiMaggio & Powell, 1983). They explain isomorphism as a constraining process towards homogenization by facing the same set of environmental conditions. A firm’s legitimacy gets reinforced by decision-makers who look at what is found to be successful in the organizational field.

11 DiMaggio & Powell (1983) distinguish two types of isomorphism: competitive and institutional. Competitive isomorphism emphasizes market competition, niche change, and fitness measures. Institutional isomorphism focuses on political power and institutional legitimacy. This study focuses on legitimization of sustainability practices and therefore is based on the institutional isomorphism of DiMaggio & Powell (1983).

“Coercive isomorphism results stems from political influence and the problem of legitimacy” (DiMaggio & Powell, 1983, p. 150). It is a result of both formal and informal pressures by

organizations upon which they are dependent. Formal pressures stem from political influences such as government mandates, common legal environment and the imposition of financial reporting and annual reports. Informal pressures stem from cultural expectations.

‘Mimetic isomorphism results from standard responses to uncertainty’ (DiMaggio & Powell 1983, p. 151). Organizations model themselves on other organizations when they do not have sufficient understanding of organizational technologies, when their goals are opaque or when the external environment creates uncertainty. The biggest advantage of mimetic behaviour is the low costs, since organizations don’t have to reinvent the wheel themselves. Organizations tend to model themselves after similar organizations in their field that they perceive to be more legitimate or successful.

“Normative isomorphism stems from professionalization” (DiMaggio & Powell, 1983, p. 152). Two aspects of professionalization are important sources of isomorphism; the formal education and legitimation in a cognitive base and the growth of professional networks (DiMaggio & Powell, 1983, p. 152). Universities and professional trainings shape their students and create a similar background, which will result in a large overlap in norms, values and ways of thinking. In addition, professional networks have similar effects.

DiMaggio & Powell (1983) note that each of the institutional isomorphic processes can be expected to enhance internal organizational efficiency. Being similar to other organizations in your field will make it easier to transact with others, to attract career-minded staff and to have status and legitimacy (DiMaggio & Powell, 1983, p. 154).

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2.3 Adoption of sustainability practices

Reasons for firms to adopt sustainability practices can differ a lot. Matten & Moon (2008) distinguish two distinct elements of CSR – the explicit and implicit. With ‘explicit’ CSR they refer to corporate policies that adopt CSR practices for some societal interests in a voluntary way. Explicit CSR rests on corporate discretion, rather than reflecting either governmental authority or other formal and/or informal institutions (Matten & Moon, 2009, p. 409). With ‘implicit’ CSR they refer to the role of corporations within the wider formal and informal institutions and concerns. These are norms, values and rules that result in mandatory and customary requirements. These firms are motivated by the societal consensus of the legitimate expectations of the roles and contributions of all major groups in society, including corporations (Matten & Moon, 2009, p. 410). If a firm adopts implicit or explicit CSR is largely dependent on the (home) institutional environment.

Matten & Moon (2008) recognize a global positive trend in explicit CSR. They use theories from the new institutionalism paradigm to explain their theory. Their key argument is that

organisations’ practices change and become institutionalized because they are considered legitimate (Matten & Moon, 2009, p. 411). This legitimacy is produced by three processes – coercive

isomorphism, mimetic processes and normative pressures. This means that the source of the

encouragement to adopt sustainability pressures can differ from employees, consumers, stockholders to government. These different influences shape the way that CSR within firms is governed (Matten & Moon 2008, p. 406).

The acquired legitimacy by firms adopting sustainability practices has several positive side effects. CSR can be a differentiator in the marketplace and create a competitive advantage for a firm (Porter & Kramer, 2006; Taken Smith & Alexander, 2013). In other words, it “pays to be green”. When companies have strong positive relationships with their stakeholders, it reduces the cost of stakeholder and customer relationship management, which increases a firm’s cost-efficiency (Wilson, in Taken Smith & Alexander, 2013, p. 157). These efficiency gains can result in innovations and tapping into new markets (Schrettle et al. 2011). Adopting CSR practices can also lead to better investment recommendations (Ioannou & Serafeim, 2010) and an increase in brand value (Weber,

13 2008). Many scholars also link CSR practices to higher corporate financial performance (Campbell, 2007). However an important limitation of this literature is that CSR is endogenous with respect to corporate financial performance (Flammer, 2015). For example, this means that a company engages is CSR because they are more profitable or expect their profits on short term to be higher. The financial implications can stop firms from engaging in CSR when they do not have sufficient resources (Campbell, 2007).

The examples of reasons to adopt CSR practices as mentioned above can be classified as internal or external pressures (Aguilera, Rupp, Williams & Ganapathi, 2007). Parent companies, shareholders, employees and personal beliefs can be seen as internal pressures, whereas customers, competitors, government, pressure groups and NGOs can be seen as external pressures (Collins, Lawrence, Pavlovich & Ryan, 2007).This research will focus on the external influences of the institutional environment.

This research will assess how isomorphic pressures influence firms’ legitimacy of

implementing sustainability practices that flow from sustainability initiatives. More specifically, this research assesses the underlying mechanisms of isomorphic pressures: the coercive, normative and mimetic pressures.

Research has already been done on isomorphic pressures, on CSR and on the relation between coercive isomorphism and CSR. However, not much research has been done on the isomorphic pressures of institutionalizing sustainability practices. This studies sets out to fill both these research gaps.

In order to answer the main research question, this research outlines two expectations. The RSPO initiative belongs to the coercive institutional environment. Both Nestlé as Unilever committed to the RSPO and became a member. This implies that both companies are open to coercive isomorphic pressures. In addition, literature gives reason to interpret that coercive isomorphic pressure is a broader concept, which captures formal and informal pressures. It consists of internal and/or external

14 culture, local culture or company culture play a role. Therefore, in order to assess the relative influence of coercive pressures, the following research expectation is formulated:

“Coercive pressures will have greater influence on the legitimacy of sustainability practices that flow from partnership initiatives than normative and mimetic pressures”.

Mimetic pressures consist of benchmarking between companies. For a firm this can be influencing in two ways: inside-out or outside-in. When faced with uncertainty, organizations economize on search costs and imitate the actions of other organizations, substituting institutional rules for technical rule (Haveman, 1993). However, within the context of a sustainable initiative, uncertainty is relatively low. Knowledge is shared within the initiative, which implies that there is no reason to imitate others because of uncertainty. Therefore the second expectation is as follows:

“Mimetic pressures have lower influence on the legitimacy of sustainability practices that flow from partnership initiatives than coercive and normative pressures.”

Figure 1 below visualizes the theoretical framework of this study, based on academic literature.

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3. Data and methodology

3.1 Research setting

3.1.1 FMCG industry

Deforestation has enormous negative effects on wildlife and especially climate change (WWF, 2015). Similar to the rise of the problem of deforestation, the attention of companies with respect to

sustainable palm oil is increasing as well. FMCG companies use palm oil in products like shampoo, soap and cosmetics, as well as in chocolate, cookies and packaged bread. Because of low prices compared to other vegetable oils, palm oil is increasingly popular. Palm oil accounts for 35% of the world’s vegetable oil market. From 1990 to 2011, palm oil cultivation increased from 15 to 40 million acres, according to the Food and Agriculture Organization of the United Nations (2013) and demand continues to rise. According to the WWF (2015) over 50% of the products produced by FMCG firms found in supermarkets contain palm oil. This implies that the FMCG has an enormous scale and scope and its potential damage to the environment can be very large.

At this point in time, the majority of large FMCG players knows the impact palm oil cultivation has on the environment and started to transform their supply chains from conventional palm oil towards sustainable palm oil. They do this with the help of organizations such as the Roundtable on Sustainable Palm Oil (RSPO), governments and NGO’s. This industry is particularly interesting since the FCMG firms not only commit to initiatives such as the RSPO because of coercive pressure from the initiative and governments, but also have a share in the foundation of these

initiatives themselves. The firms are posing to be members on voluntarily basis. However, NGO’s are pressuring companies and constantly targeting with campaigns with the aim to speed up this process. This pressure from institutions on the industry makes this industry sensitive to isomorphic pressures from their institutional environment, and therefore is an interesting industry to study.

3.1.2 RSPO

The RSPO is a non-profit organisation that unites stakeholders of all seven sectors of the palm industry: oil palm producers, processors or traders, consumer goods manufacturers, retailers,

16 banks/investors, and environmental and social non-governmental organisations (NGOs), to develop and implement global standards for sustainable palm oil. The RSPO is founded in 2004 by Aarhus United UK Ltd, Migros, Malaysian Palm Oil Association and Unilever together with WWF.

In order to produce Certified Sustainable Palm Oil (CSPO) companies must comply with a set of environmental and social criteria that the RSPO has developed to minimize the negative impact of palm oil cultivation on the environment and communities in palm oil-producing regions. Since the establishment of the RSPO in 2004 the number of members has grown to 2,819 members as of April 2016. Over 21% of the global production of palm oil is RSPO certified and this number continues to grow. The members have committed to produce, source and/or use sustainable palm oil certified by the RSPO. The RSPO system can be seen as a key driver of market transformation for a more sustainable palm oil industry.

3.2 Research methods

3.2.1 Research design

This research is a qualitative research, based on two case studies. According to Eisenhardt (1989), case studies are able to provide explanatory information and evidence necessary for theory development. Case studies can also be used for explaining existing phenomena. By using case studies new theory is being developed within the real-life context of the present-day (Yin, 2009).

This explanatory research will use a triangulation approach for collecting data. Data from different sources will be used in this study (Saunders & Lewis, 2012. In addition, comparable data for both companies has been used. For both cases annual reports, sustainability reports and progress reports of the RSPO for the years 2013 and 2014 were used. This results in a database for both cases which have similar value.

The case selected for this research is the Roundtable on Sustainable Palm Oil (RSPO) and two of its members. RSPO is an inclusive alliance, with partners actively involved in programmes and initiatives to end commodity-driven tropical deforestation.

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3.2.2 Case criteria

The RSPO is an interesting partnership initiative which is an organisation with partners from all the seven sectors in the palm oil industry; from palm oil growers to consumer goods manufacturers. Companies, NGO’s and other stakeholders can become a member on a voluntary basis. Members of RSPO, and participants in its activities come from many different backgrounds, including plantation companies, processors and traders, consumer goods manufacturers and retailers of palm oil products, financial institutions, environmental NGOs and social NGOs, from many countries that produce or use palm oil.

In 2008, the RSPO developed a set of environmental and social criteria which companies must comply with in order to produce Certified Sustainable Palm Oil (CSPO). When they are properly applied, these criteria can help to minimize negative impacts. Their scope to create awareness is enormous. Members of the RSPO are highly influential, such as the WWF (co-founder of the RSPO), but also large FMCG players such as Unilever, Nestlé, P&G, PepsiCo.

Especially the scope of the RSPO justifies the use of this case to study the relationship between isomorphic pressures and the CSR activities that flow from sustainability initiatives such as the RSPO. The scope is large, since its members are the biggest players in the FMCG industry globally. In addition, over 20% of global production of palm oil is RSPO certified, which shows the impact of this standards and criteria of the RSPO on the global palm oil industry.

The companies investigated in this research are members of the RSPO: Nestlé and Unilever. Both companies are large multinationals with global impact, who use palm oil in the products they produce and/or sell. So their scope is large – both companies are listed within the top 4 of OC&Cs ‘Global 50 FMCG Giants Ranking 2015’ (OC&C, 2015). The FMCG industry has historically been a big accomplice in deforestation. Unilever is the single largest end user of palm oil, Nestlé is ranked second, which makes both companies large in scope, which also comes with great responsibility towards setting an example for the whole industry.

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3.2.3.1. Nestlé

Nestlé is a Swiss company, founded in 1905. Nestlé’s headquarters is based in Switzerland and at this point the company has 64 brands in a wide range of markets. Nestlé is the largest food company in the world (OC&C, 2015), with a global sales of 88.8 billion CHF in 2015 (80.8 billion Euro) and an organic growth of 4.2% in 2015. This implies Nestlé has a large scope and impact regarding the use of palm oil.

Creating Shared Value is a business concept adopted by Nestlé in 2006, intended to encourage businesses to create economic and social value simultaneously by focusing on the social issues that they are capable of addressing. They focus on three areas – nutrition, water and rural development – as these are core to their business activities. In order to reduce the environmental impacts and increase the social benefits of palm oil cultivation. After Greenpeace launched a social media attack on Nestlé’s brand KitKat for the use of unsustainable palm oil, Nestlé became an RSPO member in 2010. At this point the firm is nearly reaching its target of 100% sustainable palm oil (WWF, 2015).

3.2.3.2. Unilever

Unilever is an Anglo-Dutch FMCG multinational, co-headquartered in The Netherlands and the United Kingdom. It is founded in 1929 by the merger of the Dutch Margarine Unie and British Lever Brothers. This merger was the logical result of two companies who had palm oil as major raw material and both were looking for economies of scale. Unilever today owns over 400 brands, but focuses on only 14 brands with sales over 1 billion euros. Unilever is listed as the 4th _{largest FMCG player} (OC&C, 2015) with a turnover of 53.3 billion euros in 2015. This large scope also results in a large global share of palm oil usage. In 2015 Unilever was the largest end user of physically certified palm oil and had an impact on approximately 8% of global palm oil production.

Unilever has a relatively long history of sustainability. In 1998 the firm launched its first sustainable agriculture program. Unilever has the purpose to ‘make sustainable living commonplace’ (Unilever, 2015). The company believes that this purpose is the best long-term way for their business to grow, while reducing their environmental footprint and increasing positive social impact. In 2008

19 Unilever was criticized by Greenpeace for causing deforestation and buying palm oil from suppliers that are destroying Indonesian rainforests. Contrary to this criticism, Unilever has been a founding member of the RSPO since 2004. Unilever responded by publishing its commitment to obtain 100% of its palm oil sustainable by 2015. They met this goal three years ahead, in 2003. Because of the shared history of Unilever and the RSPO, in combination with the company’s large share of global palm oil, Unilever is an interesting case for this study.

3.3 Data collection

A database is created through data collection of archival documents. The database contains all activities of both RSPO members relating their environmental CSR policies. For every case seven sources were used, the annual reports from 2013 and 2014, the sustainability reports for 2013 and 2014, the Annual Communications of Progress report for 2013 and 2014 and all company’s policy on responsible sourcing. For comparability purposes, similar documents were chosen for each case. In total this are 21 data sources. This results in the following documents shown in table 1. All of these sources, were added to the program NVivo, which is described in appendix 1.

Table 1: Overview of the data gathered

Nestlé Unilever

Source # pages Source # pages

Annual Communication of Progress 2012-2013

9 Annual Communication of Progress 2012-2013

9

Annual Communication of Progress 2013-2014

8 Annual Communication of Progress 2013-2014

9

Annual Report 2013 206 Annual Report 2013 153

Annual Report 2014 68 Annual Report 2014 149

Sustainability Report 2013 45 Sustainability Report 2013 20

20 Responsible Sourcing Guidelines

2013

24 Sustainable Palm Oil Sourcing Policy

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Total: 7 413 Total: 7 369

Total number of codes: 174 Total number of codes: 183

3.4 Data Analysis method

3.4.1 Content analysis

Content analysis was used in this study to analyse the data. Hsieh & Shannon (2005) state that content analysis is a widely used qualitative research method used to analyse textual data. Content analysis enables researchers to illuminate key issues by thorough analysis of text (Hsieh & Shannon, 2005, p. 1277). In order to interpret textual data content analysis can be used by systematically coding data into sub-themes. In this way data is clearly structured, can be compared and is ready to analyse. The text will be coded according to an objective coding scheme. Content analysis can be categorized into conventional, directed or summative content analysis (Hsieh & Shannon 2005, p. 1277). This research uses directed and conventional content analysis. Also a distinction can be made between quantitative and qualitative content analysis. Quantitative content analysis is merely focused on counting words to examining language intensely for the purpose of classifying large amounts of text into an efficient number of categories that represent similar meanings. Qualitative content analysis goes beyond counting words and interprets content of text data through the systematic classification process of coding and identifying themes or patterns (Hsieh & Shannon 2005, p. 1278). This study uses qualitative content analysis to analyse the data. However, also quantitative content analysis is used to support the results from the qualitative analysis.

Directed content analysis has the goal to validate or extend conceptually a theoretical framework or theory. It has an inductive approach can provide predictions about the variables of interest or about the relationships among variables, which helps to uncover relationships among codes

21 (Hsieh & Shannon 2005, p. 1281). This study used the approach to start coding immediately with predetermined codes derived from the theory on isomorphic pressures.

Conventional content analysis was used to code the data gathered from environmental CSR activities of Nestlé and Unilever. The analysis of data started by reading all data to obtain a sense of the whole. Then, words were coded by highlighting the key concepts of the text. The next step was to start thinking about first impressions and initial analysis. The codes were taken to a higher abstraction level than just words and these formed the initial coding scheme. The advantage of the conventional approach is to gain direct information without imposing preconceived categories (Hsieh & Shannon, 2005, p. 1279).

All the documents collected for this study are carefully analysed by using the program NVivo. This qualitative analysis program provides the ability to utilise a clear overview of the patterns and findings.

3.4.2 Coding framework

The data of the CSR practices of the two partners of the RSPO will be coded during the data gathering. These codes will be matched to the coding framework of the isomorphic pressures according to the characteristics of denominators. In this way the underlying mechanisms of isomorphic pressures influencing CSR practices of these firms can be analysed. Two types of content analysis were used in this research and therefore two types of coding. Theory on isomorphism was converted into codes that are measurable. The same process has been done by the data on the CSR activities.

The codes were developed on the basis of the theory on isomorphic pressures, according to directed content analysis. The keywords were chosen according to existing literature. The table below contains the codes and their keywords.

22 Table 2: Isomorphic pressure codes

Isomorphic pressure Coding variable Keywords

Coercive isomorphism

Regulations Government mandate, regulations, legal, policies, procedures.

Culture National culture, local culture, society, consumers

Normative Isomorphism

Education Training, schooling, sharing of knowledge

Company culture Informal, corporate culture, management, top-down, leadership

Professionalization Networks, collaboration, partnerships

Mimetic Isomorphism Benchmarking Outside-in, external, comparing to others, peer pressure; organizational modelling, influencing others

The codes on CSR activities were derived from the CSR data through conventional content analysis. This means that these codes were derived during scanning of the data. The following table contains the 12 created codes for CSR activities.

Table 3: CSR codes

CSR code Sub-code Keywords

Brand image

Core identity Corporate culture, DNA of the firm

Transparency to stakeholders

Transparency, communication to stakeholders

Commitment

Commitment of employees

Employee dedication, commitment, employee preference

Commitment to rural development

Development of rural areas, innovation, share knowledge with farmers

23 Compliance Comply to law Comply to requirements, formal, regulations, law

Impact

Call for action Influencing others, take action, start change

Responsible sourcing Mapping supply chain, suppliers, sustainable

Learning & Development

Leadership Management, decisions, authority

Partnership initiatives External partners, collaborations, network, initiatives

Continuous improvement Assess, refine

Training Training of employees, farmers, schooling, educational similarities, common ground, speak the same language

Assessment of suppliers Transparency, procedures, supply chain, production process, communication

The codes of the isomorphic pressures were linked to the CSR codes. Appendix 2 shows the results of this linking of codes. This linking of codes is necessary to establish how the underlying mechanisms of isomorphic pressures drive the CSR activities that flow from sustainability initiatives.

3.5 Validity and reliability

In a study, a strong focus on quality is necessary in terms of reliability and validity. Therefore certain methods and procedures are used to make sure this research is high in quality. In this study, the validity is enhanced by serval means.Firstly the research context and assumptions have thoroughly described. This led to the establishment of a theoretical framework, as explained in chapter 2.

Secondly, external validity is established by performing a multiple case study; using two cases and by using data from several different sources (Lewis et al., 2007). Thirdly, data was coded to find patterns in order to see causal relationships, which minimizes subjectivity (Yin, 2003). Also a triangulation of methods was used to increase credibility by using qualitative and quantitative content analysis (Lewis et al., 2007).

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4. Results

4.1 Within case analysis

This section contains the within case analysis for bot Nestlé and Unilever. It describes the sustainability practices that have been implemented in terms of sustainable palm oil as a result of being a member of the RSPO. These activities are reported by both companies in the Annual Communication of Progress, as a requirement of the RSPO.

4.1.1 Nestlé

Strategy for rural development

One of the CSR activities of Nestlé regarding palm oil is the roll-out of the ‘Rural Development Framework’ (RDF) to understand the needs of farmers. Nestlé states in their sustainability report (Nestlé, 2015) that the long-term success of the business is intrinsic to the well-being of farmers, their families and their communities. For this particular CSR activity they provide agricultural support and capacity programs to their direct suppliers. This programme, named ‘Farmer Connect’ has as main objective to ensure long-term supply, while simultaneously contributing to rural development. The suppliers receive farmer training in order to align activities of Nestlé with the priorities of farmers and local communities.

These trainings are normative isomorphic pressures for two reasons. Firstly, education creates a similar background that streamlines the supply chain of Nestlé. Secondly these trainings increase the level of professionalization in the supply chain. Nestlé creates a network of more professional

suppliers which ensures long-term success.

Code of conduct

The Nestlé Supplier Code (SC) defines the non-negotiable minimum standards that Nestlé asks their suppliers and their sub-tier suppliers, to respect and to adhere to when conducting business with Nestlé. This Supplier Code is created in 2010, a year after Nestlé became a member of the RSPO. The standards of the SC set forth expectations for the supplier with whom Nestlé does business. In

25 an extension of their Corporate Business Principles and the foundation of the Responsible Sourcing Guideline (RSG).

The RSG is a complementation of the SC, with additional guidelines, specifications and practical tools at local or regional level. The aim of these guidelines is to guide Nestlé’s suppliers to improve their practices and comply with Nestlé’s own policies and commitments relating to

responsible sourcing. Nestlé uses the RSPO as a means to verify compliance of their palm oil purchases against most of the Nestlé RSGs.

These codes of conducts Nestlé created and stimulate their suppliers to comply with are a form of coercive isomorphism. In order to be an RSPO member the RSPO has several criteria to which the member should comply to. One of those criteria is to commit to transparency. Growers and millers (suppliers) should provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, according to the RSPO. The first step to this transparency for Nestlé is to create a formal framework to ensure that the Nestlé sourced palm oil does not contribute to deforestation and respects local communities and the environment.

Not only coercive isomorphic pressures play a role in the creation of the Supplier Code and the RSGs, since mimetic pressures also had an impact on these policy changes. Competitors of Nestlé were already one step ahead. For example Unilever committed to certified sustainable palm oil in May 2008. They launched their first formal Sourcing Policy in 2009. So for Nestlé to respond on the uncertainty regarding commitment to certified sustainable palm they created similar policy documents (the Supplier Code) in 2010. Mimetic behaviour reduces the costs of uncertainty, which was one of the reasons for the creation of Nestlé’s codes of conduct.

Responsible sourcing

In 2010 Nestlé started the Responsible Sourcing Traceability Programme (RSTP), one year after becoming a member of the RSPO. The RSTP promotes compliance with the Responsible Sourcing Guidelines (RSGs) in Nestlé’s extended value chains, back to the level of primary production. The guidelines provide a framework for continuous improvement with the ambition that all their purchases will come from responsible sources that are committed to a process of continuous improvement

26 towards environmental, social and economic sustainability, supported by supply chain transparency and credible verification. The programme is based on transparency, by mapping supply chains back to their origins. The requirements are defined by applying the RSGs and are focused on starting a transformation: by assessing and developing suppliers against the guidelines. Nestlé supports the suppliers that are not ready to meet all the RSGs, but that are committed to becoming compliant over time. In addition, Nestlé created, piloted and then deployed its Traceability Declaration Document (TDD) in 2014, which suppliers are required to complete each quarter to declare the supply chain linked to the production of the palm oil used in Nestlé’s products.

This programme is an example of coercive isomorphic pressures. Again Nestlé complies with the commitment of transparency, required by the RSPO. By mapping their supply chain and assessing their suppliers they unravel the opaqueness in their supply chain, which is in line with the criteria of the RSPO. This programme is also an example of a coercive isomorphic pressure because Nestlé responds to pressures of consumers and stakeholders. In their Sustainability report of 2014 they speak of “an increasing pressure of consumers and other stakeholders to know where their food comes from and how it was produced” (Nestlé, 2014, p. 3). Nestlé experiences higher expectations by society and acts upon this by increasing the transparency of their supply chain.

Partnerships

Nestlé is involved in a number of community programmes in palm oil producing countries. An example is Nestlé (Malaysia) Bhd, which plants forest seedlings up to 150 kilometres on both sides of the Kinabatangan River under a reforestation project that will create a landscape where people, nature and agriculture co-exist harmoniously in their need for water.

Nestlé does not only partner with (local) community programmes, but also with larger stakeholders. An example is the partnership with The Forest Trust (TFT) to ensure its sourcing of palm oil is not contributing to illegal rainforest and peatland clearance. The announcement of the partnership comes exactly two months after Greenpeace launched a campaign against Nestlé for its links with the Indonesian palm oil producer Sinar Mas, which it accuses of illegal deforestation.

27 Partnership projects are an example of professionalization which can be linked to normative isomorphic pressures. Nestlé uses company networks for collaboration towards environmental CSR. Local community programmes have valuable information about the local area, society and suppliers. Nestlé has valuable information regarding sustainable sourcing. An information flow from Nestlé to the local partners and vice versa strengthens both parties. By working together, Nestlé and the local community project can speak ‘the same language’ and have more impact. The same argument goes for the partnership with the large stakeholder TFT. However, this can also be seen as a coercive

isomorphic pressure, since Greenpeace pressured Nestlé for its links with a palm oil producer accused of illegal deforestation. In order to maintain/restore the public image of the company, Nestlé has to respond to these pressures and partnered with the TFT to show their commitment towards a supply chain with zero-deforestation.

4.1.2 Unilever

Sustainable Palm Oil Sourcing Policy

In May 2008 Unilever committed to certified sustainable palm oil, and in 2009 they launched their first formal Sustainable Sourcing Policy. Unilever was one of the first large companies in the FMCG sector to launch a Sourcing Policy. In 2013 Unilever extended the Sourcing Policy with a typical focus on palm oil, leading to the Sustainable Palm Oil Sourcing Policy, building on the principles & criteria of the RSPO as a foundation, but with more ambitious standards. The policy is designed to drive market transformation by working with key suppliers and the wider industry to halt deforestation, protect peat lands and drive positive economic and social impact for people and communities. These principles are vital to create a sustainable palm oil industry. In 2015 Unilever revised its Sustainable Palm Oil Sourcing Policy and added the requirements for suppliers including Unilever’s sustainable sourcing and compliance targets. By setting a high standard in Unilever’s own supply chain, they aim to be an example for the industry.

Unilever’s CSR activities regarding sourcing policies are influenced by coercive isomorphic pressures. Unilever committed to the RSPO, so the company needs to meet the principles & criteria that are set by the RSPO. In this way the RSPO pressures Unilever to create a formal sourcing policy

28 and a policy regarding the sourcing of sustainable palm oil. In addition, this can also be seen as

normative isomorphic pressures. Unilever shows a high level of professionalization, by not only meeting the principles & criteria of the RSPO, but also exceeding them.

Responsible sourcing

In order to transform their supply chain to a completely traceable and sustainable supply chain, Unilever works together with their suppliers. In December 2013 they announced a Memorandum of Understanding with Wilmar, a supplier of Unilever and the leading agribusiness group in Asia. This agreement meant that the company’s plantations would only provide products free from links to deforestation and human rights abuses.

In 2015 Unilever made direct investments in the supply chain in order to enable the types of market transformation that they aim for. Unilever invested 130 million in a new palm oil refinery in Indonesia. This investment increases the effectivity to produce 100% physically certified palm oil, to improve traceability and to bring more smallholders in the supply chain.

The collaboration with suppliers can be seen as a coercive isomorphic pressure. The RSPO requires their members to commit tot transparency. Unilever’s activities regarding the traceability of sustainable palm oil stem partly from these requirements. In addition, the direct investments made by Unilever in their supply chain are more normative isomorphic pressures. Again Unilever not only meets the requirements by the RPSO (which would be coercive), but also exceeds these expectations.

Driving transformation in the palm oil industry

Unilever is actively using its influence to raise standards across the industry. Unilever’s role in market transformation stretches back to 2004, where they led the founding of the RSPO. Also they played a big role in the foundation of the Consumer Goods Forum, the Tropical Forest Alliance, and the New York Declaration on Forests. Leadership plays an important role in the aim of Unilever to transform the Palm Oil industry. The CEO of Unilever, Paul Polman, is a driving force behind these initiatives and puts Unilever on the map. In Unilever’s sustainability report (2015) he states: “Unilever is the single largest end user of palm oil in the world and with this scale comes a responsibility and

29 opportunity to transform our own supply chain and to positively influence the wider palm oil sector of which we are part.”

Unilever engages on a wide range of supply chain and public policy issues related to deforestation and palm oil by both advocacy and procurement teams. Unilever recognizes that partnerships of businesses, governments, and civil society are important to achieve sustainable development. In order to make an impact Unilever wants to align their business action with public policy. An example of this is the Tropical Forest Alliance, created with the governments of Norway, the Netherlands, UK, US, Indonesia and Liberia and several NGO’s.

The CSR activities of Unilever to transform the palm oil industry by partnerships, leadership, networks and trainings are all an example of normative isomorphic pressures. Partnership projects are an example of professionalization. Unilever has valuable knowledge and experience regarding sustainable palm oil production. However, they know that they don’t have all the knowledge and influence to change the industry, so through collaboration with partners they can have more impact. Unilever wants to be a leader in the transformation of the industry, which is also an important normative isomorphic pressure.

The CSR activities of Unilever to transform the palm oil industry can also be seen as mimetic isomorphic pressures. Unilever tries to influence their competitors by setting a benchmark and

stimulate other companies, even their own competitors to take their lessons learned and best practices, in order to speed up the shift towards a complete sustainable palm oil industry.

4.2 Cross case analysis

4.2.1 Quantitative results

To answer the research expectations, whether coercive isomorphism is mostly influencing CSR activities that flow from sustainability and mimetic isomorphism is least influencing, the codes of the isomorphic pressures and CSR activities were linked. Appendix 1 shows the complete overview of results. The table below shows the top four most occurring CSR codes for both firms.

30 Table 4: Most occurring CSR codes for Nestlé and Unilever

CSR code Isomorphic pressure Occurred at Nestlé

Occurred at Unilever

Commitment to rural development

Coercive – internal company regulations

29 26

Leadership Normative – leadership 15 26

Transparency to stakeholders Coercive – stakeholder pressure 20 21

Partnership initiatives Normative - networks 14 24

This table suggests that Nestlé is mostly influenced in their sustainability activities by coercive isomorphic pressures. This table also shows that Unilever is mostly influenced by normative isomorphic pressures compared to Nestlé. However, when focussing more on the context and the content of the CSR activities, such as in the results of section 4.1, it becomes clear that this quantitative table does not capture the complete picture of both companies. For example, table 5 shows two interesting CSR codes that are not shown in table 4. These codes are interesting because it shows notable differences, which can help explain why Unilever is more influenced by normative isomorphic pressures compared to coercive isomorphic pressures.

Table 5: Differences between Nestlé and Unilever

CSR code Isomorphic pressure Occurred at Nestlé

Occurred at Unilever

Call for action Mimetic – influencing others 4 29

Core identity Normative – corporate culture 8 13

4.2.2 Qualitative results

If we compare the results of both companies, it can be concluded that Unilever has been influenced more by normative isomorphic pressures compared to coercive and mimetic pressures. Nestlé is mostly influenced by coercive pressures, compared to normative and mimetic pressures. This means

31 that there are different outcomes for the two expectations for this research when comparing the two companies. The results can be shown below in table 6.

Table 6: Outcomes for the research expectations for Nestlé and Unilever

Nestlé Unilever

Research Expectation 1 True False

Research Expectation 2 True True

Comparing both companies to each other, normative isomorphic pressures are more influencing for Unilever than for Nestlé. And in addition, coercive isomorphic pressures are more influencing for Nestlé than for Unilever. Nestlé is more driven by the external institutions. Consumers and other stakeholders such as the RSPO have a big impact on the CSR activities that flow from being a RSPO member. Nestlé is mostly focused on a transformation of their own supply chain and the transparency of that supply chain. For Unilever the CSR activities that flow from being a member of the RSPO are more influenced by normative pressures such as collaboration and leadership. The main focus for Unilever is to transform the market for palm oil as a whole. They do this in two ways: firstly they focus on the sustainability in their own supply chain in order to set an example. Secondly they actively advocate for certified sourcing of palm oil. Unilever takes on an active role by founding partnership initiatives such as the RSPO itself, but also the CGF and the TFA.

Comparing the companies regarding the second research expectation, the companies seem to have a similarity: both are least influenced by mimetic pressures. This means that uncertainty relatively does not play a big role for both companies in the creation of CSR policies and activities.

5. Discussion

This chapter discusses the results more in depth, by using existing literature to explain the findings. Also the main research question will be answered and implications for both partnership initiatives as for FMCG companies will be sketched. Finally the limitations of this research will be discussed, as well as possible directions for future research.

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5.1 Research question

This chapter connects the literature review to the results of this research. It discusses these results by comparing them with the present literature. Focus will be on the contribution of this study to the literature. The main aim of this study is to explore how isomorphic pressures affect the

implementation of sustainability activities that flow from sustainable partnerships. Therefore different pressures were researched: coercive, normative and mimetic pressures. The coding scheme as

explained in chapter 3 divided these pressures into sub components in order to see differences between those three mechanisms.

For both companies the results for the research expectations were different. As showed in table 6, for Nestlé, both research expectations were true, whereas for Unilever research expectation 1 was false and research question 2 was true. Several other interesting aspects arise from the results as well, this will be discussed in the following paragraphs.

The results for the first research expectation: “Coercive pressures will have greater influence on the legitimacy of sustainability practices that flow from partnership initiatives than normative and mimetic pressures”, were inconclusive. Contrary to expectations normative pressures had the most influence for Unilever. Literature suggested that coercive isomorphic pressure, would have the highest influence, since both companies are open to coercive pressures regarding their membership of the RSPO. In addition coercive pressures are broader and more diverse: from formal government mandates and hard criteria of NGO’s to informal pressures such as national and local culture. It is interesting that the results for Nestlé were consistent with this expectation, whereas the results for Unilever were more divergent.

The results for de second research expectation: “Mimetic pressures have lower influence on the legitimacy of sustainability practices that flow from partnership initiatives than coercive and normative pressures”, were conclusive. For both companies, mimetic pressures had the least influence. This suggests that uncertainty regarding CSR activities that flow from the RSPO is low or the costs to overcome this uncertainty are low. However, some interesting findings regarding differences in mimetic isomorphic influences can be explained.

33 Firstly it can be stated that Unilever and Nestlé were more or less evenly influenced by

coercive isomorphic pressures. Table 4 shows that from the top 4 most occurring CSR codes, Nestlé has a frequency of 49 regarding CSR codes influenced by coercive isomorphism, whereas Unilever has a frequency of 47. This implies that both companies are aware of their commitment and the influence from the RSPO. The difference is in the influence of normative isomorphic pressures. Unilever has a frequency of 50 regarding CSR codes influenced by normative isomorphism, whereas Unilever has a frequency of 29. This implies that the CSR activities of Unilever are more characterized by leadership, partnership initiatives and influencing other companies. This difference between the two companies can be explained by different kind of leaderships, governance and a difference in the structure of shareholding.

According to the collected data, a difference in leadership style between both companies can be seen as the major reason for the difference in results. Nestlé is mostly focused on leadership within the company, whereas Unilever wants to be a leader in the industries they operate in. A good example is in the words of the CEOs in the sustainability reports of both companies. Paul Bulcke, CEO of Nestlé says: “We recognise that our position in society brings both opportunities and responsibilities: to do business in compliance with national laws, international standards and our own values and principles. For a company like ours to prosper, we must take a long-term view, framed in a robust set of principles and values. They are based on respect: respect for people, respect for cultures, respect for the environment and respect for the future world we live in.” The CEO of Unilever, Paul Polman states: “Progress with our Sustainability Plan is not enough. We are at a turning point in history, a point where we all need to change for the human life on the planet to continue to prosper” and “We work together with other organisations through partnerships that have the potential to change things on a global scale – with a focus on climate change and deforestation”. Polman is more outspoken than is colleague Bulcke and is more seen as a charismatic leader. To link this back to literature we see that Burns (1978) makes a distinction between transformational, or charismatic leadership and

transactional leadership. The difference between these two leadership styles is in what the leader has to offer to its followers. Transformational leaders offer a purpose that transcends short-term goals and

34 focuses on higher order intrinsic needs. Charismatic leaders with inspirational motivation challenge followers with high standards and communicate optimism about future goal attainment. Transactional leaders, in contrast, focus on the proper exchange of resources (Judge & Piccolo, 2004, p. 755). Unilever’s leadership is more focused on transformation, while Nestlé’s leadership has a main focus on transaction. This difference in leadership style can also explain why Unilever has a higher frequency of inside-out mimetic isomorphic pressures.

Secondly differences in the results can be explained by differences in country culture. According to Matten & Moon (2008), CSR is very much context driven. Nestlé is homebased in Switzerland and Unilever is double-based in both the UK as the Netherlands. Difference in institutional context influences differences within CSR policy (Matten & Moon, 2008). Whitley (1999) states that institutional factors of a country form country-specific national business system (NBS) in terms of nature of the firm, the organization of market processes and coordination and control systems. For example, Unilever has a higher frequency on partnership initiatives (24), compared to Nestlé (14). This implies that Unilever is highly involved in stakeholder collaboration, which strong company networks, which can be influenced by the institutional home environment of the company.

Secondly the difference in results can be explained by a difference in corporate governance between the two companies. One major difference is that Unilever is an Anglo/Dutch firm and has a dual-structured company. It consist of two legally separated entities: Unilever PLC (UK) and Unilever N.V., which together form the Unilever Group. Unilever is mostly similar to the Dutch NBS: both companies have the same Board members. However, both companies have different shareholder constituencies, which have different voting rights according to the laws of the Netherlands and the UK. Because board members need to be elected by both companies (PLC and NV) shareholders have less power to influence. Nestlé has a more traditional governance structure, with a Board of Directors that are responsible for the supervision and management of Nestlé’s role in society. The day-to-day management of Nestlé is taken care of by an Executive Board. The major difference between these two structures is that the shareholders of Nestlé have more influence on the Board and the decisions of

35 the Board than the shareholders of Unilever have on their Board. This implies that the

top-management of Nestlé has more at stake regarding the expectations of the shareholders. This could be an explanation why Nestlé is more focussing on sustainability within their own supply chain compared to Unilever, which is more focussed on a transformation of the industry.

5.2 Implications

When looking at the top four in table 4 the results show that coercive and normative were the most occurring influences on the CSR activities that flow from a sustainability initiative. The relatively high influence of normative pressures implies that firms are more prone to implement CSR activities through networks, professionalization and education. This means that when a firm is tightly knitted and is able to ‘speak the same language’ throughout the whole firm, commitment to CSR activities is higher. This can be accomplished by trainings. Unilever, for example, states that 13.000 of their employees completed a sustainability e-module. By facilitating these training for all their employees, commitment to CSR activities can be increased.

In addition this study shows that differences in implementation of CSR activities are caused by a difference in internal or external focus. As mentioned previously, Unilever’s focus is more external compared to the internal focus of Nestlé. This difference in focus is partly caused by strategy of the top-management. Leadership plays a big role in this, even as the shareholder structure. When a leader is more transformational, the firm will have a more external view. In addition, the higher the power of shareholders, the more cautious a firm acts in terms of sustainability policy. When shareholders have relatively more power, the more the focus of the firm will be on an internal sustainability focus.

Finally this study implicates for national governments that formal coercive pressures such as regulations, mandates and laws are at this point not in the top of most influencing factors. However, sustainability initiatives such as the RSPO, but also the CGF and TFA are supported by national governments. In this way national governments stimulate the adoption of CSR activities only indirectly, through the informal coercive pressures of these sustainability initiatives. In order to increase the speed of the transformation of the palm oil markets, national governments could higher their standards in formal ways, through regulation or laws.

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5.3 Limitations and further research

Despite of the interesting insights regarding sustainability initiatives that flow from partnership initiatives, this research has some weaknesses. As in any case of academic writing, this paper is not excluded from limitations. This also leads to insights and ideas for further research.

Firstly, to get a purely objective view of reality, a content analysis is a difficult method. By using NVivo, and using a combination of different content analysis methods there has been tried to minimize the interpretation of the author. The method was in this case credible because the purpose of the study was to get more insight on this subject. Credibility was gained by using a triangulation of data and methods. Therefore these outcomes are valid and interesting. However, validity could be enhanced by also using other sources of data besides archival reports, to support the outcomes. It is recommendable to use a mixed method in future research on this subject.

Secondly, both companies are originated in different countries. By selecting only companies from the same country, the indirect effect of national cultures can be minimized.

Finally, it could also be appropriate to study isomorphic pressures that influence CSR activities that flow from sustainability initiatives. The content that is used in this study to explore the coercive pressures, only gives indirect results from the decisions and criteria of the partnership initiative. For future research it might be interesting to investigate the direct effect of pressure from these initiatives by interviewing them, amplifying the results of this study.

This research was conducted by exploring the response of FMCG companies to isomorphic pressures, in the context of partnership initiatives. A point for future research might be to study these effects in other industries, to see if the findings of this study still hold true. A different partnership initiative could be chosen, such as initiatives in the fast fashion industry.

It might also be interesting to compare the responses of firms within a similar industry, but with different firm characteristics. For example Bowen (2000) states that smaller firms are less likely to adopt sustainability practices compared to larger firms. It would be interesting to study if this theory