Trafigura, the $122 billion commodities trading company, is growing fast.
With that growth has come tough choices – often under immense pressure, but where is the company going in the future?
This July in Mongolia, Pierre Lorinet, Trafigura’s CFO, commented on what would make for the most intriguing educational case studies related to the company’s recent history and future plans. Here is a sampling of ideas:
(1) “how we responded” – the company has taken a beating for not only (alleged and/or real) wrongdoing, but its reaction to negative press and protests. In MBA curricula we still sometimes refer to “Shell and Ken Saro-Wiwa’s court-sanctioned murder in Nigeria” or use as shorthand “Shell in Nigeria” and “Shell and the Brent Spar incident” to allude to the nasty issue of (real or perceived or ambiguous) corporate culpability in ecological and/or human tragedies. Trafigura’s experience (before, during, and after the crisis in Côte d’Ivoire) could be even more interesting to study from the point-of-view of senior management, in that they had less time and power to identify and prevent problems before they escalated. Wouldn’t it be interesting to role play what we would do in a similar situation, and read the accounts of how people “in real life” reasoned-through their options in Trafigura’s case?
(2) “trade financing” – this is not at the tip of everyone’s tongue when we talk about critical issues to the world’s economy or well-being of our planet’s +7 billion people. What is the future of trade finance and the role of commodity-trading companies in our lives?
(3) “how we learned about sustainability in commodities trading” – in this context, I think it will be most interesting to see how Trafigura implements sustainability reporting in the coming years. Apparently this is in the works. To their credit, they don’t (according to Mr. Lorinet) want to come forward with a report that is not verifiable or is perceived in any way to be lacking. “The report needs to demonstrate the strength of our systems and processes – we will not report for the sake of it,” Lorinet said. We discussed this, and the merits of the argument that “something is better than nothing-at-all.” Mr. Lorinet said that Trafigura has already adopted better procedures and approaches to stakeholder engagement but he was also clear that there is more to be done.
On a final note: Pierre Lorinet established his credibility with me long before we got to discussing any of these topics – early in our interactions, he described how and why he urged his sister-in-law (a quarto-lingual Mongolian) to pursue sustainability studies at an Ivy League university that she will be attending this fall. I can’t speak to the veracity of any of the accounts (positive or negative) concerning any of the news stories related to Trafigura in recent years, but, based on our interactions, my impression is that at least some of the senior management of the company have sustainability issues on their mind. As with any story, the past is prelude and the most fascinating pages are the ones yet to be written.