More than a Tractor: Cultivating Stakeholder Value at Deere & Company
By Colin Craig
For many of us Americans, we have a general awareness of who John Deere is and what the company does. Perhaps you grew up on a farm and remember spending sweltering summer days riding a John Deere tractor, row after neatly tilled row in the field. Maybe you enjoyed seeing the variety of tractors, some of which were John Deere, making their way down main street during the parade in your hometown. Or, if you are like me, you may have fond memories as a little kid getting to sit on the big tractors and farm equipment at your local county fair.
Whatever the case, John Deere is one of those names that we all know. Or do we?
You see, in addition to manufacturing tractors, John Deere strives to contribute to a flourishing society in a variety of ways. Through innovative products, philanthropic efforts, and its consideration of stakeholders more broadly, Deere & Company (the company behind the brand name John Deere) is more than a tractor company – they are a Shining Light Company.
Meeting Needs through Innovative Products
In addition to a variety of tractors and associated equipment, did you know that Deere & Company also manufactures everything from backhoes and bulldozers to golf/sports turf equipment and logging equipment? A quick scan of John Deere’s website reveals an extensive product portfolio, which more than exhausts the length of this article. One noticeable business strategy woven throughout John Deere’s website is its product innovation.
This summer, Deere & Company acquired Smart Apply, Inc., an Indianapolis-based precision spraying equipment company. John Deere has partnered with Smart Apply since 2020 but saw the acquisition as a natural progression in the two companies’ working relationship. Smart Apply’s LiDAR (light detection and ranging) technology “senses the presence of individual trees and vines and automatically adjusts spray volume based on foliage density to optimize protection.”1 John Deere’s press release noted that this technology achieves up to 93% less chemical runoff, up to 87% reduction in airborne drift, and reduces both chemical and water use by an average of 50%. These reductions not only offer potential cost savings, but also show a notable care for creation.
Like the automobile industry, John Deere has now launched into the self-driving industry. First revealed at CES 2022 in Las Vegas, the Autonomous 8R Tractor allows farmers to operate and monitor the machine remotely from a smartphone or tablet, giving farmers more flexibility to multi-task and increase productivity. Using 360-degree cameras, a high-speed processor, and an AI-powered neural network, the Autonomous 8R Tractor has the potential to help address the labor shortage problem that has been crippling the agricultural industry. This technology, in John Deere’s opinion, can help feed the growing global population in the years to come. If your curiosity was piqued, like mine, check out this short video on the innovative technology from John Deere.
Meeting Needs of the Community through Philanthropy
For many employees, when someone falls ill or gets injured, they can simply use paid time off, workers compensation, or employer-sponsored disability insurance to continue receiving their income stream. For many self-employed farmers, however, it isn’t that simple. The farm is the farmer’s economic livelihood!
Recognizing this issue, Fargo, ND-based Farm Rescue steps in to help farmers in time of need. “With help from volunteers, Farm Rescue assists with planting, haying, harvesting and livestock feeding for farm and ranch families.”2 And John Deere is there to help! John Deere and its dealers now provide all the organization’s equipment, and John Deere employees also serve as volunteers with Farm Rescue. John Deere even hosted a virtual benefit concert featuring prominent country music artists for Farm Rescue in December 2020, amidst the backdrop of the global economic challenges brought about by the COVID-19 pandemic.
But Farm Rescue is not the only non-profit that John Deere partners with. The John Deere Foundation is committed to donating $200 million over the next decade particularly focusing on hunger and helping farmers thrive, especially in developing countries.
Earlier this fall, the John Deere Foundation announced a total of $19 million in grants to organizations fighting global hunger. In its press release, John Deere explained the grants were “awarded to World Food Program USA, One Acre Fund, and The Nature Conservancy… [the] three largest grants in the foundation’s history.”3 John Deere also donates to local food banks, helping to address hunger in the United States.
Other notable community activities that John Deere pursues are partnership with Habitat for Humanity, local disaster response coordinated through its dealerships, several youth education and apprenticeship programs, and their Military Hiring Program.
Whether it is through Farm Rescue, grants to non-profits fighting hunger, or it’s other community activities, John Deere has demonstrated that it is committed to human flourishing via its philanthropic efforts.
Meeting Needs of Global Human Rights Standards
When analyzing a company, we believe it is prudent to consider how the company interacts with all its stakeholders, including its suppliers, customers, the community, the environment, employees, shareholders, etc. We’ve touched on some of these above, but given the fact that manufacturing is a supply-chain dependent industry, we must ask ourselves, how does John Deere protect human rights in its supply chain?
In addition to its commitment to complying with applicable laws, John Deere also holds its suppliers to a code of conduct, which “prohibits suppliers from using child, forced, involuntary, or slave labor.”4 For a specific example, in the Supplier Code of Conduct, John Deere notes that “suppliers must not facilitate or participate in human trafficking; use forced, involuntary, or slave labor; or purchase materials or services from companies using forced, involuntary, or slave labor” and they must certify that they comply with these standards.”5
However, John Deere doesn’t merely rely on suppliers’ self-certification. Rather, the company audits its suppliers for unethical/illegal employment practices or behaviors that do not comply with its Supplier Code of Conduct. John Deere also uses data from third-party global Corporate Social Responsibility ratings agencies to validate suppliers’ claims of compliance.
Investing in Shining Light Companies
While no company is perfect, we strive to invest in companies that we believe are making a positive impact in our world today. At Beacon Wealth, we like to call these companies Shining Light Companies. Based on its innovative products, philanthropic efforts, and its consideration of other stakeholders, such as its supply chain, we believe John Deere is an example of one of those companies that is helping humanity to flourish. If you are interested in learning more about how your investment dollars can make a positive impact in the world today by investing in innovative companies, like John Deere, please don’t hesitate to reach out to us today!
Colin Craig, MBA, CSRIC® is an Investment Associate at Beacon Wealth Consultants where he serves as a member of the investment management team.
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