Friday, January 7, 2011

11 top food companies fail at sustainability

A very interesting report was published recently by Bank Sarasin and Co Ltd,  called: " Food and Sustainability: Will the seed bear fruit? " . It discusses the sustainability ratings of the top 15 listed food and beverage manufacturers worldwide including Heinz, Danone, Unilever, Nestle and others. The report highlights three central sustainability themes that affect food producers: (1) health and nutrition, (2) sourcing more raw materials from sustainable agriculture and (3) committing to fair working conditions.  How the sector approaches these core sustainability material issues is the basis for the Bank's rating.

Health and Nutrition - some of the issues

Obesity: We all know about the problems of obesity, exacerbated through manufactured, processed, ready-cooked, fast, faster, junk, junkier and junkiest food. There is also a suggestion that the drop in levels of breast-feeding in favour of infant formula may contribute to fatter kids. In fact, obesity levels have been steadily rising for the past 20 years and are predicted to continue to do so. This report quotes that the cost of healthcare could increase by 240% by 2040 due to upward-trending obesity levels, checked only by the fact that life expectancy of the expensively obese is shorter than that of the thinnies. Not that it's ok to enjoy your food and die early, because in the meantime, equitable access to nutritious food is still a problem.

Problem food content: Salt, sugars, fats, What role does and should government play in ensuring healthy food availability and non-availability of healthy food, for example, banning high-cal snacks in schools. More legislation can be expected as governments and consumers increase awareness.

Enjoyment food: I wonder if this concept existed in the days of Fred Flintstone? The entire food industry has created a special place for enjoyment, indulgent, pleasure foods, all of which are really superfluous to a healthy diet and a sustainable planet. The trade-offs between health and enjoyment are a phenomenon of our advanced commercialized world and food industry. Would banning chocolate make us all more sustainable? Oy! and what about Chunkey Monkey ..... err...... help....

Raw materials and sustainable farming - some of the issues 

Problem agriculture: The report quotes that agriculture, once "an emblem of prudent management of natural resources" now accounts for 90% of global deforestation, is the biggest consumer of chemicals, generates the highest volume of GHG's and consumes about 70% of the planet's freshwater resources. Not a pretty picture, huh ? We are simply eating the planet for lunch, bite by bite. Food manufacturers are key protagonists in these global dining habits.

Organics: Even with the continuing buzz around organic food, organics is still a niche market and will account for less than 1% of farmland worldwide during the next 50 years, according to the report by Bank Sarasin. Important crops such as sugarcane, palm oil and soya are still not moving up the organic ladder. How manufacturers are revising their strategies to ensure long-term sourcing security is critical for sustainable food supply. 

Green genetic engineering: For or against? Modifying seeds to make them more resistant to pests and therefore reduce use of pesticides may well sound like an ideal solution but the technology is controversial and not readily digestable by all (haha, what a pun!). Bank Sarasin thinks the risks of GMO's outweigh the opportunities and discount seed producers from their investment recommendations. 

Sustainable farming methods:  The approach of manufacturers to ensure sustainable farming methods are a part of their overall supply chain strategy is critical. Heinz, for example, is the world's biggest producer of processed tomatoes and has pioneered the cultivation of tomatoes requiring fewer pesticides. The report mentions that some major food producers have entered into agreements with leading environmental organisations to advance sustainable farming.

Factory and field - fair working conditions - some of the issues

Global rights and global labour:  As more production is outsourced, so fewer employees are protected by international labour conventions and enjoy freedom of association, the report advises. The implementation of globally applicable employment standards is problematic leaving many workers with no protection of their rights. An indicator of this is whether a company discloses how many employees in their supply chain have a fixed employment contract. Apparently, not many disclose this detail.

Poor working conditions: Issues abound in farming and food production - seasonality, "subsistence risks through crop failure and price collapse", accidents and illness caused through agrochemicals etc. It is quoted that 60% of child labour is concentrated in agriculture.

Market power of big companies: In what Bank Sarasin called a bottleneck market structure, prices and conditions are dictated by a very small number of retailers, despite sourcing from many small-scale farmers. This gives rise to an inequitable distribution of wealth and inevitably, the small guy whose quality of life depends on the price he gets for his banana takes the hit. Fairtrade, development of relationships with farming cooperatives and other approaches are available to address these issues, in part. The take-up of these options by food manufacturers is a key element in creating a responsible and sustainable supply chain.   

Overall, this report of Bank Sarasin, authored by Dr. Gabriella Ries Hafner,  offers some fascinating insights about the sustainability impacts of the big food manufacturers. It is clear that the issues are still far from resolved and that overall, food manufacture has light-years to travel before it has a net positive sustainable impact. Rethinking the entire food value chain management in a systemic way is the task ahead. In Bank Sarasin's analysis, only four of the top 15 global food and beverage manufacturers (Danone, Heinz, Unilever and Nestle)  fall into the "social investment universe"  because they appear to be addressing these issues effectively. (See the matrix in the Bank's repease about the report)

We all have a role to play in making food supply more sustainable. The issues highlighted by the report published by the Bank are just some of the things we should be watching for as we read the Sustainability Reports of these corporations (and we should be reading them).  If they are not addressing these issues, amongst others, they are not serious about sustainability and we should be letting them know that we know.

And as for Chunky Monkey... well, every rule has its exception, no ?  

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)


dave_stangis said...

As someone who has worked with Sarasin on their rankings for about 10 years in 2 sectors (including this last round on food), - let me first say - there is always something to learn and improve upon as a company when studying the results.

Let me also point out that there is a systemic bias in their ranking (they aren't the only ones) that makes it difficult for any food companies to move into their "recommended investment" quadrants. Congratulations to those that have.

Moving from one sector to another and being an engaged participant in all of these investment rankings over the last decade has shed a lot of light on the strengths, weaknesses and utility of the various methodologies.

Shirley Kantor said...

Elaine, thanks for a fascinating post. I love your sense of humor - it makes CSR reading much more fun :-)

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