The development of company policy on sustainability not only needs to include suppliers but also the wider NGO sphere – from government and unions and from farming groups to aid charities. Here the briefing discusses examples of established bodies that incorporate broader stakeholder involvement.
Working in partnership
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It may be something of a truism in the sustainability field but the challenge of raising ethical standards in supply chains can only be effectively met by companies and industry groups working in partnership. This not only means collaboration with their suppliers but with each other and with external stakeholders such as local, regional and national governments, international governmental agencies, unions, farmers’ groups, aid charities, and other NGOs.
Pre-competitive industry collaboration
Many industry associations have launched sustainability initiatives that allow supply chain issues to be discussed among peer companies as a pre-competitive issue. While such discussions may lack the broad representation that multi-stakeholder partnerships can provide, being able to bring together the entire sector in a common cause is advantageous in its own right.
The International Dairy Federation (IDF) launched its Global Dairy Agenda for Action on Climate Change last year. The initiative groups together some seven major dairy associations which, according to the IDF, speak for around 90% of the global dairy supply. Speaking to just-food after the launch, IDF president Richard Doyle suggested the decision by seven such powerful organisations to collaborate in this way was unique among commodity markets and reflected the importance being attached to sustainability in the global dairy supply chain.
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By GlobalDataThe seven associations have jointly committed to promoting the development of a standard methodology for assessing the dairy sector’s carbon footprint; assisting the adoption of best practice to reduce GHG emissions; establishing tools to measure and monitor on-farm and processing emissions; promoting farmer understanding of agricultural emissions and opportunities to reduce them; and supporting information-sharing to develop cost-effective mitigation technologies.
The initiative is designed to be a reference point for actions taken by the dairy sector across the world covering topics like agricultural emissions research; investment in greener energy and optimising animal feeding; fertiliser usage; manure management; product distribution and energy use in milking and refrigeration; the increased use of recyclable and low-impact packaging; waste recovery; energy capture from waste; and shelf-life extension for fresh products. Not long after its inception, the website had catalogued some 260 projects across 40 countries.
AIM-PROGRESS, meanwhile, is a global initiative supported and sponsored by AIM, the European Brands Association (Association des Industries de Marque) and the Grocery Manufacturers Association (GMA) in North America. It is a forum of consumer goods companies that aims to promote responsible sourcing practices and sustainable production systems. Key objectives include the provision of a forum to exchange views on responsible sourcing practices and supporting the effective collaboration and potential convergence with other global initiatives with similar objectives.
It aims to develop and promote the use of common evaluation methods to determine CSR performance within the supply chain and drive efficiencies for all companies by collecting, assessing and sharing non-competitive information on supply chain CSR performance.
The Consumer Goods Forum has a sustainability platform and published its first sustainability report – on packaging – in July this year. The organisation says its Global Packaging Project’s report, ‘A Global Language for Packaging and Sustainability’, is the first of many projects planned for the organisation’s sustainability pillar.
Engaging with government agencies
Campaigners are not surprisingly sceptical of industry-led initiatives, which are often characterised as being too slanted towards the interests of large companies. The question of how such activities overlap with industry groups’ lobbying brief also exercises campaigners.
However, liaison with regional and national governments and inter-government agencies is critical. Sustainability issues in food supply chains are being addressed by policymakers, and industry will naturally seek to influence that process. Indeed, the IDF states that the second prime objective of the Global Dairy Agenda for Action on Climate Change was to engage with politicians to secure a “supportive regulatory policy environment” in which the dairy sector can deliver on the commitments it has made “without compromise to the industry’s contribution to global nutritional and social wellbeing”.
In fact, one of the most recent and prominent industry-led collaborations, the European Food Sustainable Consumption and Production (SCP) Round Table, convened by the CIAA in 2009, arguably has that political engagement function at its core as it is co-chaired by the CIAA and the European Commission.
As with the IDF programme, the Round Table has the benefit of very widespread industry coverage. There are some 23 member organisations participating, representing all areas of the European food supply chain. This, the CIAA explains, enables it to take “a harmonised, life cycle approach and facilitates an open and results-driven dialogue among all players along the food chain”. There are now four different DGs participating in the Round Table, which is also supported by the European Environment Agency and the UN Environment Programme (UNEP).
The aim is to promote “a science-based, coherent approach to sustainable consumption and production in the food sector across Europe, while taking into account environmental interactions at all stages of the food chain”.
Multi-stakeholder initiatives
While the European SCP Round Table could prove an important forum for discussion between food companies, their suppliers and government agencies, it does not include representation from NGOs. This, the CIAA stresses, is not from want of trying. But NGOs are careful about partnering with industry, fearful that NGO endorsement can be used in greenwashing exercises.
However, when multi-stakeholder collaborations can be negotiated they can be effective. In particular, the multi-stakeholder sponsorship lends initiatives significant public and political credibility and legitimacy. On the debit side, carrying multilateral support is a heavy burden which means initiatives where they can be negotiated tend to progress slowly.
Prominent multi-stakeholder initiatives such as the Ethical Trading Initiative (ETI) and the Fair Labor Association (FLA) in the US have focused on social rather than environmental impacts in supply chains. However, multi-stakeholder partnerships have also been launched to address environmental issues, such as the Better Sugarcane Initiative, the Marine Stewardship Council (MSC), which is discussed in the third section of this report on communicating with consumers, and the Roundtable on Sustainable Palm Oil (RSPO).
The RSPO brings together stakeholders from seven sectors involved in the palm oil industry: palm oil producers, palm oil processors or traders, consumer goods manufacturers, retailers, banks and investors, environmental or nature conservation NGOs and social or developmental NGOs. Its goal has been to develop and implement global standards for certified sustainable palm oil (CSPO).
External stakeholder engagement
While companies have placed a high priority on engaging with their suppliers on sustainability issues, wider stakeholder engagement has an important role to play in making supply chains more sustainable. At a company level, engagement with NGOs and civil society organisation has now become an integral part of supply chain management for many retailers and food manufacturers.
For example, Delhaize has collaborated with the Gulf of Maine Research Institute in the US on its sustainable seafood programme. This year, Danish ingredients group Danisco has set up a stakeholder advisory board that includes NGO representation. In South America, Archer Daniels Midland is working with Aliança da Terra, a Brazilian NGO, on a sustainable soybean initiative. Cadbury, meanwhile, describes the collaboration with NGOs such as Care, World Vision and VSO as a key element in the Cadbury Cocoa Partnership supply chain initiative.
Spreading best practice and community investment
Engaging with suppliers cannot be simply about telling them what is expected of them. Tasking suppliers to adopt more sustainable practices or meet environmental criteria and targets will achieve progress but food companies and retailers have quickly learned that a more hands-on involvement in reforming practices in their supply chains is likely to result in faster change. It will also make the process more efficient as the company will be able to shape sustainability developments at its suppliers to their specific needs.
These initiatives can take the form of training and development programmes for suppliers or community investment. There are many references in sustainability reports to supply chain initiatives of this nature involving social investment in agricultural communities or training and development programmes for local companies and cooperatives. For enlightened global food companies, such activities are increasingly becoming an integral part of supply chain management.
For example, in 2000, Unilever began working with a university in Indonesia to engage with local farmers, providing technical assistance and financing to improve productivity and boost incomes. The initiative has grown from 12 farmers in 2001 to 7,000 farmers cultivating 700 hectares in 2009.
In Mexico, PepsiCo’s snacks business, Sabritas, participates in a programme with the Mexican Foundation for Rural Development (FUNDAR), which aims to assist low-income farming families in corn-producing communities. Sabritas contributes to technical and business training for farmers, and transfers relevant technology to the communities. PepsiCo explains that the programme is aimed at fostering cultural change in these communities leading to the creation of small, sustainable agribusinesses. Meanwhile, Nestle points to community investment/training programmes it has initiated in Vietnam, Central America and West Africa.
For parts I, III, and IV of this just-food management briefing, click here.
