How AB Inbev is trying to change the world
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I spotlighted the Change the World list yesterday, but I will do so again today, because it is a welcome antidote to the cynicism that pervades today’s discussions today about the state of business. The list focuses on companies that are doing good even as they are doing well, and it’s inspiring to read.
Number 22 on this year’s list is AB InBev, the world’s largest brewer, whose CEO Carlos Brito is this week’s guest on our podcast Leadership Next (Apple/Spotify). I asked him about the Smart Barley program, which Fortune editors highlighted in the list. It’s a triple-play that provides a better standard of living for AB InBev’s farmers, less of an impact on natural resources, and increased reliability of supply—and profits—for AB InBev.
“You are doing a good thing for the communities where we operate, but also something that is good for the environment, authentic to our business, and it makes sense. The program has supported 20,000 farmers around the world in things like crop management, weather information, and seed variety.
“We are very different as a business than, for example, a smart phone manufacturer. A smart phone is manufactured in two or three countries in Asia and sold in 200 countries around the world…We brew 95% of what we sell locally. Our supply chain is local. We get the water locally. We buy from local farmers. We brew the beer locally. We sell to consumers locally. And we hire our colleagues locally. So we are very connected to communities.”
Brito’s comments reminded me of a theme from Rick Wartzman’s very good book, The End of Loyalty. What we now call “stakeholder capitalism” once existed in many U.S. communities that had strong companies based in them—think Kodak in Rochester, GM in Detroit, or Coca-Cola in Atlanta. But as supply chains went global, community ties frayed. The AB InBev program shows how important it can be to reestablish those connections. Said Brito:
“Many of those farmers, we elevated them from subsistence to commercial farmers, so they can send their kids to school and stuff, because now they have more money and a better life. And we also support their communities. We have a global footprint, but we act locally.”
It’s a good lesson for other companies that pay less attention to the well-being of global suppliers. Other news below.
Federal Reserve Chair Jay Powell will tell Congress today that "direct fiscal support" (as opposed to Fed loans) is needed for small and medium-sized businesses that are struggling during the pandemic. The Fed already has a $600 billion fund for medium-sized businesses, but strict terms mean it has barely been used. Powell: "Many borrowers will benefit from these programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer. In these cases, direct fiscal support may be needed." Financial Times
Jeffrey Katzenberg's Quibi (it’s a video-streaming platform) is struggling to sign up subscribers and is now exploring its options, including a potential sale. Quibi apparently has enough cash to see it through the coming months, and in a statement it said Katzenberg and CEO Meg Whitman "are committed to continuing to build the business in the way that gives the greatest experience for customers, greatest value for shareholders and greatest opportunity for employees." Wall Street Journal
China is expanding its hugely controversial "training center" program from Xinjiang into Tibet. There are quotas for the mass transfer of rural workers within Tibet and into other parts of China; first, the workers are reeducated in military-style centers that, in the Xinjiang context, have been criticized by international human-rights groups for alleged coercion. Just in the first seven months of this year, 15% of Tibet's population has been through such training. Reuters
Work from home! No, get back to the office! Umm, work from home again, please—that's roughly the trajectory of the British government's messaging in recent months, culminating in a U-turn announced today. Michael Gove, a senior member of Boris Johnson's Conservative government, said this morning that the government was reluctantly making a "shift in emphasis" and asking people to work from home again where possible, in order to combat skyrocketing COVID-19 figures. There's also a new 10 p.m. closing time for restaurants, pubs and bars. Guardian
AROUND THE WATER COOLER
HSBC, whose shares are skidding following leaks about its processing of suspicious transactions, has told its staff to stop posting on the company's social media accounts "to avoid negative reactions and comments across our channels and content." Fortune
New research from LinkedIn shows more than two-thirds of European C-level executives have found the COVID-19 pandemic to be their biggest-ever professional challenge. Nearly a third had to make employees redundant, 42% had to ask staff to take a pay cut, and in the U.K., 62% of leaders had to furlough staff. The biggest challenge for 72% of the surveyed executives was not having all the answers—and just over half doubted their own ability to lead at times. LinkedIn
The U.S. Centers for Disease Control and Prevention last week fell into line with the emerging scientific consensus that the novel coronavirus is spread not only through droplets but also through tiny "aerosol" particles that travel a lot further. But yesterday, it unexpectedly removed its new guidelines on the matter, apparently because it is still working on its new recommendations about airborne transmission of the virus. NPR
Alberta, home to Canada's lucrative oil sands, is struggling with a contracting economy and high unemployment. It's a classic "resource curse" and some, such as Calgary Mayor Naheed Nenshi, are desperately calling for Alberta to diversify its economy and embrace clean energy. But as Fortune's Katherine Dunn (a Calgary native) explains in this quite personal piece, the sustainability discussion is being hampered by political polarization. Fortune
This edition of CEO Daily was edited by David Meyer.