Who would have thought that food adulteration, typically a consistent feature in the developing world, will shake the European continent? Such was the extent of the recent horsemeat scandal that investors in global food companies are being warned of their companies inadequate monitoring of farm animal welfare.
Last month, horsemeat was found in burgers and beef meals in the UK and Ireland, prompting many supermarkets to remove affected prepared meals from their shelves. With about a dozen countries involved in the scandal, talks about the adulteration being the work of criminal conspiracy has international media going abuzz with the issue.
For global food companies such as Walmart, Nestle, Carrefour, etc., failure to monitor farm animal welfare has become Achilles heel. Reputed newspapers such as the Financial Times are urging investors to take an active part in forcing better monitoring and reporting on part of the companies they invest in. Two things emerge from this ensuing conspiracy about horsemeat. Firstly, that food supply chains anywhere in the world are too large to fathom. While by no means does that justify the kind of adulteration which is the topic of review, the magnanimity of supply chain and consequent problems, such as the ones being discussed, require equally magnanimous efforts by all stakeholders.
Secondly, with the call for investors to take active notice of the issue, prominence of what is being called socially responsible investment is surfacing. So, unleashing the power of the mammoth force called investors, companies will come under more pressure to ensure thorough traceability of their products, or risk losing some market value on their shares.
The concept of socially responsible management can be found in Islamic investment to some extent, with investors being averse to companies that have a large debt share. Thus boards of directors know that piling up on leverage is making their company less appealing for interest-averse investors.
Keeping health and trust issues arising from consumption of horsemeat aside, there are definitely positives that this scandal has brought about. First, supply chain checks will likely be improved to quite an extent, and secondly, the power of investors will receive much prominence after the long-touted adage that consumer is king.
Heres hoping that these positives actually materialise, and further hoping - albeit a tad idealistically - that the issue will set precedence for less developed countries like Pakistan.