Food producers need to invest in environmental supply chain policies to anticipate NGO scrutiny, manage reputational risk, plan for resource scarcity and deal with competitive pressure.
The warning comes from Verdantix, a sustainability consultancy, which has just produced a report, Sustainable supply chain benchmark: food sector.
The report says that only four out of 12 of the world’s largest food producers have invested in codes of conduct to guide the environmental performance of their suppliers – Unilever, Danone, Heinz, and PepsiCo.
It looks at the environmental strategies of Associated British Foods, ConAgra Foods, Danone, General Mills, Heinz, Kellogg, Kraft, Mars, Nestlé, PepsiCo, Sara Lee and Unilever.
Verdantix research head Rodolphe d’Arjuzon points out that while all the companies have supplier codes of conduct for such issues as child labour, discrimination and working hours, only the four mentioned also have environmental codes.
The question is: what is the most appropriate strategy for a particular organisation? The report highlights three potential approaches:
1. Leadership strategies that mandate environmental and social standards, target 100 per cent sustainable supply of agricultural and raw materials and engage directly with farmers to improve performance. This, it says, is the approach taken by Danone, Heinz, Nestlé and Unilever.
2. Opportunistic strategies that are motivated by country-specific product sales opportunities. It points to Kraft’s commitment to source 100 per cent certified sustainable coffee beans – but only in Europe. These firms undertake audits of high-risk suppliers in areas like palm oil and subscribe to industry data sharing platforms to reduce cost and increase the breadth of supplier data collection, is says.
3. Baseline sustainable supply chain strategies that reflect a reactive, lower cost approach to managing social and environmental issues in the supply chain. As an example, it point to ConAgra Foods, which it says relies primarily on a North American supply base which reduces its risk profile and need to invest in auditing and enforcement of supplier codes of conduct.
Clearly different strategies will be appropriate for different organisations. What is very clear is that whatever strategy is adopted, there will be implications for every player in that supply chain.
Children used to be told: “Eat your greens.” Increasingly, companies are likely to be told: “Green your eats.”