Food companies lack sustainable supply chain initiatives

by Array

LONDON, England—A new report says the world’s major food producers aren’t doing enough to manage environmental issues in their supply chains.

The analyst firm Verdantix came up with that conclusion after studying supply chain initiatives of 12 global food producers: Associated British Foods (ABF), ConAgra Foods, Danone, General Mills, Heinz, Kellogg, Kraft, Mars, Nestlé, PepsiCo, Sara Lee and Unilever.

The overall finding of the report, entitled Sustainable Supply Chain Benchmark: Food Sector, is that food and agri-businesses need to invest in more robust codes of conduct for the management of environmental issues in the supply chain and set a broader range of targets for improved future performance.

“The world’s largest food producers have impressively detailed supplier codes of conduct for social issues such as child labour, collective bargaining, discrimination, health and safety and working hours” said Rodolphe d’Arjuzon, global head of research at Verdantix.

“They track data effectively using the Sedex platform that runs on Enablon’s software platform. But just four of the firms in our study—Danone, Heinz, PepsiCo and Unilever—have invested in wide-ranging codes of conduct to guide the environmental performance of their suppliers. The other firms in the food sector need to invest in environmental supply chain policies to anticipate NGO scrutiny, better manage reputational risk, plan for resource scarcity and deal with competitive pressure. As part of the overhaul of sustainable supply chain strategies, all the firms in the study need to follow Nestlé’s lead by establishing targets for standards compliance, supplier training and material sourcing.”

The study outlined three possible approaches companies can take.

The first consists of establishing leadership strategies which mandate goals and targets for environmental and social standards. This approach requires strong leadership input, ideally led by the CEO. An example of this would be to mandate that a company develop a 100 percent sustainable raw material supply chain across the globe.

The second approach is what the study calls opportunistic strategies. These are smaller, country-specific initiatives. The study cites Kraft’s commitment to using 100 percent sustainable coffee beans in its European product offerings as an example of this.

The third type opportunity is the development of baseline sustainable supply chain strategies. These should be lower-cost projects that simplify the supply chain. The example the study uses to illustrate this strategy is ConAgra relying primarily on a North American supply base to reduce its risk profile and make it easier to enforce a common code of conduct for its suppliers.