The Federación Nacional de Cafeteros de Colombia (FNC) is one of Colombia’s largest and most important businesses. But in 2008, coffee prices were crashing and long-simmering conflicts between the government and insurgents ignited into all-out war in several coffee regions. Instead of ramping up armed security at headquarters or withdrawing from precarious areas, FNC’s CEO, Luis Genaro Muñoz, decided to implement a 10-year plan of community engagement and peacebuilding trainings. The FNC case illustrates how partnerships with their communities can deliver economic advantages to companies, as those that fully embed typically gain a legitimacy that improves their security and profitability and those of their employees. The idea that a company truly cares about the welfare of its workers and their community can be powerful, especially in places where people have been ignored or even victimized by their own government.
Rodrigo Lopez plucked the deep-red coffee cherries with his calloused hand, dropping them a handful at a time into a burlap bag. Nestled nearly a mile above sea level, Lopez’s farm in the Andes mountains of Colombia has the perfect climate and soil for coffee. Lavazza buys his exceptional harvests for its finest espresso-quality Italian roasts; his decent harvests become Folgers.
But the hard-to-access terrain is also the perfect climate for growing another addictive cash crop: coca, used to make cocaine. Lopez’s small farm stands nearly equidistant between the cities of Cali and Medellín, home to two of Latin America’s most notorious drug cartels. The thick vegetation and lack of infrastructure like paved roads has made the area an ideal hideout for insurgent groups and paramilitaries.
In 2005, Lopez’s farm was ground zero for some of the western hemisphere’s most brutal violence in 50 years. Lopez remembers those times when he walks past the house of his former neighbors, who vanished one night without a trace. The next day, leftist guerrillas from the Fuerzas Armadas Revolucionarias de Colombia (FARC) lived there. The next month, rightist paramilitaries forced FARC out and attacked Lopez’s family, taking their life savings at gunpoint and eating every one of their chickens. Lopez didn’t dare complain. He stopped farming, fearing he’d be killed for daring to fight for his land or forced to grow coca instead.
FARC retook the area a year later, but Lopez’s hope that things would get better was short-lived. He heard gunshots in his field for hours before insurgents yelled, “Comrade! Come out immediately, we need you.” Lopez emerged in his pajamas, sure he was a dead man walking. He was forced to chauffeur FARC soldiers around town in his old pickup truck at gunpoint while they took potshots at police officers. That night, Lopez ripped out the truck’s alternator and threw it into a ravine — he and his truck would never be pawns of war again.
At one time or another, tens of thousands of coffee farmers across Colombia have faced a similar choice: keep farming coffee despite the risk of violence, switch to coca and become direct participants in drug production, or abandon their farms, like Lopez, and try to scrape by in cities overflowing with conflict migrants. Eventually, though, they found a fourth option, one that contains a lesson in how to run a business in the face of constant danger, uncertainty, and violence.
A Different Playbook for Crisis
Lopez, who we spoke with over several visits in late 2016 and early 2017, and whose name has been changed for protection, is part of the Federación Nacional de Cafeteros de Colombia (FNC). Founded in 1927, and popularly known as Juan Valdez, FNC is one of Colombia’s largest and most important businesses. It is a public and private alliance of more than 500,000 coffee producers, and historically it has prioritized strong relationships with its farmers. But by 2008, amid the global financial crisis, coffee prices were crashing, FNC was losing money quarter after quarter, and long-simmering conflicts between the government and insurgents ignited into all-out war.
Luis Genaro Muñoz, the CEO of FNC, received a drumbeat of reports that grew worse by the day: destroyed supply lines, extorted farmers, and even executions of staff by guerrillas and paramilitaries. He cycled through the standard fixes of increased protection and supply chain management to no avail, and felt pressure to ride out the conflict by cutting costs and securing FNC’s assets.
But standard fixes — including pulling out of the worst-hit areas — were the exact things that would endanger farmers like Lopez and FNC’s local employees. They would also harm the company’s long-standing business model, which depended on small-scale Colombian coffee producers; in fact, FNC’s product was marketed around them. Muñoz realized that he needed a new model. With his company’s future on the line, Muñoz launched a five-year plan and took three radical steps.
First, he made the company the public face of peacebuilding in the coffee regions. This meant putting FNC branding on peace initiatives that had no guarantee of success and using the company’s political capital to bring key actors to the negotiation table. If it worked, the government, rebels, and local community could all rebuild society together with help from FNC. If it failed, he’d take the blame for a failed peace and a new spiral of violence.
Second, Muñoz transformed FNC’s relationship with its farmers from one of buyer and occasional benefactor to one of partners in crisis. Working with the United Nations, the Spanish Agency for International Development Cooperation, and the NGO Humanismo y Democracia (now called La Fundación Concordia y Libertad), Muñoz integrated national and international development agencies into his company’s operations in hundreds of villages, building long-term projects aimed at finding solutions that worked for all stakeholders, even FARC and the paramilitaries.
These weren’t simplistic CSR-style initiatives like donating money or supplies; they were in-depth consultations that treated the business, the local community, and authorities as equal participants, with equal stakes in their mutual success. Muñoz hired more than 1,000 people across the country to distribute peacebuilding training modules at village roundtables, train their neighbors and fellow citizens in community engagement and dialogue, and facilitate farming and sustainability best practices.
(Photo: Raul Arboleda/AFP via Getty Images)
Third, and most audacious of all, Muñoz invited both the leftist guerrillas and the rightest paramilitaries to the village roundtables, knowing that without their buy-in, any cease-fire would be impossible. By uniting everyone, and finding new ways to go forward together, Muñoz aimed to build a profitable local peace in FNC’s operational areas, one that would be stronger than what even the Colombian government’s own initiatives could achieve.
The roundtables started tenuously; most local communities refused to sign on out of skepticism or fear, and insecurity grew as insurgents and paramilitaries warned the farmers against organizing. Muñoz persisted, publicly committing to double the project’s length to a decade and making a multiyear financial commitment to ensure that peacebuilding activities would be completed.
Lopez and tens of thousands of brave coffee farmers responded to Munoz’s call by doing something radical of their own: They banded together under the project, hoping that there would be strength in numbers. Some were murdered as a result, but that didn’t stop the rest. They used their collective strength to tackle the conflict head-on, holding community dialogues and peacebuilding trainings under the threat of death.
Eventually, FARC commanders and paramilitary members joined the initiative, seeing more to gain from a transition to peace than from yet another cycle of war. Confident that FNC was a trusted broker that wouldn’t vanish if violence spiked, farmers began to rebuild their communities. “We realized that they had our backs,” Lopez said. As for the community, “the project helped to establish friendships across party lines. We became closer to each other and started building peace together. We started taking care of our public goods such as the roads and schools.…Peace is not just something coming from the government but from neighbors, too.”
After one year, the security situation improved so much that Lopez and thousands of his FNC brethren could safely return to their fields. The project concluded shortly after the government of Colombia signed a peace agreement with FARC in 2016. Today FNC has not only survived in one of the world’s most dangerous crisis zones but has expanded its coffee sales into 32 countries. More importantly, its farmers earn higher prices and have greater yields all while living and working in a safer, more secure, and more sustainable business environment.
Learning from FNC’s Success
The FNC case is a powerful example of a company’s ability to create positive change in the communities where it operates. But what lessons are applicable in other crisis settings? We offer three places to start.
Move beyond traditional CSR and ESG activities.
When communities are dealing with a socioeconomic or political crisis, anything that looks like lip service from a company won’t improve community relations. Most mining and oil firms in Colombia, for example, combine traditional corporate social responsibility (CSR) or environmental, social, and governance (ESG) activities with securitization strategies to cope with violence. Despite the high financial cost, these initiatives have largely failed to improve the companies’ standing with locals, as they are perceived to help the company’s needs more than the community’s, exacerbating mistrust of the firms. The companies that, like FNC, build lasting programs instead of one-offs are the ones that succeed.
But there isn’t just one way to become crisis-proof through community engagement. For example, Éxito, a Colombian retail company, stands at the fore of reintegration efforts by helping former fighters return to civilian life. Company operations serve as a training ground, and Éxito has hired former members of both FARC and the paramilitaries. Éxito works to reintegrate fighters and communities as a strategic goal to face crisis head-on, and profits have followed. The strategy both reinforced the idea that Éxito works for the people, gaining it customer loyalty, and protected the company from attacks by criminal organizations, allowing it to expand into markets it could not enter before.
While its exact activities differed from FNC’s approach, Éxito was equally successful in building trust among key actors across Colombian society. These examples show that marrying the community’s deepest needs to a company’s deepest expertise leads to the strongest partnerships.
Managers are rarely trained to proactively address the challenges that arise in crisis-affected communities, and as a result tend to adopt a business-as-usual mindset. But firms impact the places where they operate whether they realize it or not, and local perceptions matter. In worse-case scenarios, if locals believe a company is enabling violence rather than trying to stop it, they can revoke its social license to operate — that is, its acceptance by the community. And once lost, that license can take years or even decades to win back.
To get managers on board with being proactive, emphasize that community welfare is a competitive advantage and engagement is a key part of their responsibilities. Our research finds that companies that fully embed in a community typically gain legitimacy and reputational advantages over competitors, especially in places where people have been ignored or even victimized by their own government.
Further, research has shown that context-specific knowledge is critical when addressing complex risks. This means it’s crucial for managers to understand what motivates local actors, the real versus perceived severity of potential crises, and on-the-ground rumblings about looming threats.
Invest in and nurture community trust.
Trust-based relationships can create deep social ties that embed the firm into the fabric of the community. When that happens, it can give rise to a valuable, hard-to-copy source of competitive advantage for businesses. Building localized knowledge is done first and foremost by listening to local actors without preconceptions or assumptions about what they need. This includes understanding their skills and competencies as well as the political and social risks they face.
As FNC discovered, trust in relationships must be earned; it isn’t given easily. For good reason, it took months of dedicated community effort to get farmers to buy in to FNC’s engagement concept. In Colombia, as in many conflict and crisis settings, well-intentioned community projects by outsiders come and go, filled with grand promises in the beginning and usually failing to deliver in the end. Any firm wishing to build trust and support in such settings must prove — not just claim — that it will be a committed partner in the community’s survival. FNC demonstrated this by expanding the project’s timeline from five years to 10. Only once trust — and business — was concretely established within this period did FNC end its deep engagement efforts, transitioning to a lighter approach.
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From violent conflicts to social unrest, businesses are facing crises that they can no longer ignore or avoid. Managers that recognize the value of contributing to local prosperity and peace will enjoy tangible returns to the company’s bottom line, even if the gains might seem difficult to immediately quantify. These decisions can also save livelihoods — and sometimes even lives.
Ten years after he threw his alternator into a ravine, Lopez tended to his trees with the care of an artisan. His hard work had paid off: The cherries he harvested would be in Italian espresso cups the next year. That’s thanks in large part to the courage FNC’s Muñoz showed by believing in a new community model, and the peace that farmers like Lopez built together throughout the region.
Ultimately, the fortunes of businesses are inextricably tied to the communities in which they operate. It’s a lesson both Rodrigo Lopez and Luis Genaro Muñoz can attest to.