Global Food Companies 'Should Upgrade Sustainable Supply Chain Strategies'

Only four of the world's largest food producers - Danone, Heinz, PepsiCo and Unilever - have invested in wide-ranging codes of conduct to guide their suppliers' environmental performance, according to a new report from Verdantix.

Verdantix benchmarked the sustainable supply chain strategies of the 12 largest global food firms, with collective revenues of $390 billion, and found the other eight — Associated British Foods (ABF), ConAgra Foods, General Mills, Kellogg, Kraft, Mars, Nestlé and Sara Lee — 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.

The report, Sustainable Supply Chain Benchmark: Food Sector, also says all the firms in the study need to follow Nestlé’s lead and establish targets for standards compliance, supplier training and material sourcing.

Verdantix identifies three potential sustainable supply chain strategies for food producers to follow:

• Establish leadership strategies that mandate environmental and social standards, target 100 percent sustainable supply of agricultural and raw materials and engage directly with farmers to improve performance. For example, Danone, Heinz, Nestlé and Unilever typically have a CEO-led, long-term vision for sustainable business.
• Use opportunistic strategies motivated by country-specific product sales opportunities, such as Kraft’s commitment to source 100 percent certified sustainable coffee beans, but only in Europe. These firms should 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.
• Set baseline sustainable supply chain strategies that reflect a reactive, lower-cost approach to managing social and environmental issues in the supply chain. For example, ConAgra Foods 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.

In a recent study by Green Research, 62 percent of executives surveyed at major global companies said a lack of measurement standards impairs their efforts to track supply chain sustainability performance.