More nuanced approach may end the stalemate in baby milk debate

FTSE’s decision to adjust the way it assesses company performance on the marketing of breast milk substitutes has to be a welcome step forward (see page four).

The fact that no eligible company has managed fully to comply with FTSE4Good’s requirements since they were introduced in 2004 must say something about the state of play in this complex and controversial area. Either the businesses involved are not making much effort, or the hoops through which they are being asked to jump are too small. In general, the FTSE4Good indexes have a creditable record of encouraging companies into executing social and environmental improvements, and of rewarding them for having done so. Yet on this thorny topic there has been little progress.

This is not just FTSE’s problem. As the index provider notes, at the bottom lies the deep suspicion that still exists between NGOs and the breast milk substitute manufacturers. For too long, companies failed to dispel the perception of being in denial and refusing to engage with the issue. At least initially, there was a propensity to tackle boycott campaigns from a public relations perspective rather than seriously addressing important concerns. NGOs, for their part, have been slow to recognize that marketing practices have been reformed and that, by and large, business is committed to comply with the World Health Organization’s International Code on the issue, even if there is the occasional recidivism.

Up to now FTSE has been influenced in its rules on breast milk substitute marketing by the expectations of civil society bodies. But the subtle changes it is introducing may signal a departure from the NGO-favoured route of concentrating on transgressions. Interestingly, FTSE has now asked PricewaterhouseCoopers to certify that ‘well-functioning policy compliance, management and monitoring systems are in place’. This focus suggests that in future companies may be forgiven the odd slip if it can be demonstrated they have overarching systems that make failings the exception rather than the rule.

If this is indeed the case, then expectations in this area will gradually fall into line with standards applied to many other aspects of corporate responsibility. Few people these days, for instance, would demand that a company should be kept out of an SRI index on the grounds that certain long-standing shortcomings – even as grave, but hard to eradicate, as the employment of child labour – can still be found in its supply chain. They are far more likely to face exclusion for being unable to show that they have a plan to tackle such problems. The same approach should be taken in relation to the marketing of breast milk substitutes, and it appears that FTSE has come round to that way of thinking.