All systems go on sustainability strategies
June 11, 2014
by Eric Schroeder
Sizing up sustainability efforts, 2014 looks to be a banner year.
In an analysis conducted by the Governance & Accountability Institute, 72% of the companies included in The S&P 500 Index — a list that includes such food and beverage companies as Campbell Soup Co., Coca-Cola Co., General Mills, Kellogg Co. and PepsiCo, Inc. — published a sustainability or corporate responsibility report in 2013, up from 53% in 2012 and only 20% in 2011.
“We are seeing clear indications over the past three years that senior corporate management understands the importance of adopting and implementing strategies that reflect the rising interest of investors and stakeholders in corporate sustainability,” said Louis D. Coppola, executive vice-president of the Governance & Accountability Institute. “Companies headquartered in the United States of America are publishing sustainability reports in greater numbers, and with more content that meets stakeholder expectations.”
Companies are publishing the reports for good reasons, not the least of which is consumers are interested in the information.
In late May, the International Food Information Council (IFIC) published its “Consumers perceptions of food technology” survey, which found awareness of sustainability in food production remains relatively high, with 57% of Americans saying they have heard or read something about sustainability in food production. This compared with 56% in 2012, 50% in 2010 and 41% in 2008.
Not only are consumers aware of sustainability, more than two-thirds surveyed by IFIC said it is important their foods are produced sustainably. “Sustainably” was defined by IFIC as “meeting long-term food needs by producing more food affordably with the same or fewer resources, in a way that is better for the environment and keeps food affordable and accessible for consumers.”
The aspects of sustainability most important to Americans are “conserving the natural habitat” (47%) and “ensuring an affordable and sufficient food supply” (45%), according to the IFIC survey. Meanwhile, 15% of Americans surveyed cited “reduced packaging material” as most important, while 13% said “recyclable packaging” and 13% said “lower carbon footprint.”
A pledge from leading executives
Top executives from many of the world’s largest food and beverage companies gathered in early May in Bentonville, Ark., for Wal-Mart’s inaugural Sustainable Product Expo. The three-day event was held to highlight several initiatives to further expand access to sustainable products and create more transparency in the supply chain.
“Wal-Mart and our suppliers recognize that collaboration is the key to bringing sustainable solutions to all of our customers,” said Doug McMillon, president and chief executive officer of Wal-Mart Stores, Inc. “A great deal of innovative work is happening every day, but there are still too many gaps and missed opportunities. Today’s commitments are about creating real systems change from one end of the supply chain to the other — meaning how products are grown and made, how they’re transported and sold, and how we touch the lives of people along the way.”
Among the food and beverage companies represented at the event were Campbell Soup Co., Cargill, The Coca-Cola Co., General Mills, Inc., Kellogg Co., Keurig Green Mountain, Inc., Monsanto, PepsiCo, Inc. and Unilever.
Kendall Powell, chairman and chief executive officer of General Mills, said the Minneapolis-based company will work with Wal-Mart to bolster the work of Field to Market, a non-profit organization focused on working across the agriculture supply chain to address the food demands of the rapidly growing population, while conserving resources. The companies jointly committed to more than doubling the acreage enrolled in the Field to Market initiative to 2.5 million acres by 2015 and agreed to co-sponsor an innovation challenge for the innovators and farmers who demonstrate the most promise to reduce greenhouse gas emissions in nitrogen management.
“General Mills recognizes the importance of collaborating with others to address global challenges and pursue solutions to sustainability priorities,” Mr. Powell said.
Kellogg Co., meanwhile, is collaborating with Wal-Mart to support the livelihoods of rice growers and sustainable rice growing practices around the world. Specifically, Kellogg pledged to further support rice growers and rice growing communities to help smallholder rice growers advance their practices, while also reducing greenhouse gas emissions by 2020. The company also committed to promoting and supporting initiatives with producers in every country in which Kellogg sources rice globally, that will, by 2020, lead to a 25% increase in the adoption of Climate Smart Agriculture practices.
“As a grains-based company, we have a commitment both to the environment and to the people who grow those crops,” said John Bryant, chief executive officer and president of Kellogg Co., Battle Creek, Mich.
He continued, “Because rice is one of our largest ingredient purchases — used for Rice Krispies and Special K worldwide — it’s appropriate that our new partnership with Wal-Mart focuses on supporting smallholder rice growers as they work to improve their methods — and with that their yields and livelihoods as well.”
Coca-Cola Co., Keurig Green Mountain, PepsiCo and Unilever were among the companies partnering with Wal-Mart in a new recycling commitment. Called the “Closed Loop Fund,” the initiative will help finance projects that increase recycling, Wal-Mart said.
“The aspirational goal is to divert valuable raw materials from landfill by helping to provide 100% of U.S. consumers with access to recycling where and when they need it,” Wal-Mart said. “We are calling the rest of our peers and competitors to join us on this journey. We will be announcing full commitments in the coming months.”
Also during the Sustainability Product Expo, Wal-Mart previewed plans to create a sustainability store on www.walmart.com. The shopping portal, expected to launch by the end of 2014, will allow customers to easily identify brands that are leading sustainability within a category via a special icon.
“No one should have to choose between products that are sustainable and products they can afford,” said Manuel Gomez, vice-president of sustainability for Wal-Mart. “We want to make sustainability easy by taking the guesswork out of values-based shopping. Accessibility and transparency really put the customer in the driver’s seat.”
The new on-line tool for customers and other initiatives to drive sustainability across the supply chain are based on metrics from the Sustainability Index.
Hershey, Mars also making headway
Although not represented at the Wal-Mart gathering, The Hershey Co. and Mars, Inc. nonetheless are at the forefront of several recent sustainability initiatives. Hershey issued its third C.S.R. report on May 1, saying it has delivered “substantial progress” against its corporate social responsibility goals, completing 60% of its published goals and making progress against the remaining 40%, which are on track to be completed on time.
Hershey, Hershey, Pa., said it achieved 100% Mass Balance Roundtable on Sustainable Palm Oil (R.S.P.O.)-certified palm oil in 2013, ahead of its 2015 deadline, and also surpassed its goals of reducing waste by 25% in 2015 (achieved 38% reduction by end of 2013), achieving a recycling rate of 85% by 2015 (rate was 86.6% by end of 2013), and reduce greenhouse gas emissions by 13% by 2015 (achieved 22% G.H.G. emissions reduction by end of 2013).
McLean, Va.-based Mars, meanwhile, through a partnership with Sumitomo Corp. of Americas has invested in a wind farm that will generate 100% of the electricity needs for its U.S. operations, comprised of 70 sites, including 37 factories. Based near Lamesa, Texas, Mesquite Creek Wind was developed by Sumitomo and BNB Renewable Energy. With an annual output of more than 800,000 megawatt-hours, the 118-turbine wind farm will produce energy for 24% of Mars’ total global factory and office carbon footprint, equivalent to the electricity required to power 61,000 households.
Representing the biggest long-term commitment to renewable energy use by a U.S. food manufacturing business, the wind farm moves Mars toward its goal of achieving more sustainable operations and eliminating greenhouse gas emissions by 2040.
“We are committed to doing our part to limit climate change,” said Barry Parkin, chief sustainability officer at Mars. “We are therefore delighted to be announcing this major renewable project that takes us a big step towards our goal of becoming carbon neutral in our operations. This is an innovative approach that makes great business and environmental sense.”
Mars isn’t the only company riding the wind. Stafford County Flour Mills Co., a small flour milling business in Hudson, Kas., has begun installing a wind turbine, a move that would make it the first commercial flour mill in North America to use wind power generated electricity produced on-site. The installation of a wind turbine will allow the company to offset retail energy rates and lower carbon emissions, the company said.