How more company sustainability agendas are taking in supply chains

Ben Cooper | 17 June 2015

The sustainability reports and announcements of major food companies increasingly reflect the greater attention being paid to environmental and social impacts in their supply chains, whereas initially the primary focus tended to be on areas under their direct control or "within their four walls".

The evolution to a 'whole value chain' model is entirely logical and, in the context both of shared global priorities around climate change and food security and of companies' ultimate ambitions to establish robust and sustainable businesses, necessary.

It is also borne out of the greater appreciation of risk in supply chains now influencing corporate strategy. While companies seek to decouple business growth from impact, a parallel trend is the ever tighter coupling between sustainability and risk management.

Specifically, agricultural supply chains account for the vast majority of a food company's water impact and this is often in areas of far greater water stress than their own plants. The evolution is also a natural consequence of the involvement of external stakeholders in shaping sustainability missions. Arguably no group has more at stake from a company's decisions than its suppliers, and ask most NGOs working on environmental issues or the developing world to identify what they feel a company's priorities should be and there will only be one answer.

Recent events have underlined the changing emphasis. The last couple of months have seen conferences convened by two prominent multi-stakeholder initiatives aimed at driving sustainability in major commodities, namely soy and palm oil. The latter, the third European Roundtable held by the Roundtable on Responsible Palm Oil (RSPO), was preceded by a letter from major companies and investors calling for tougher standards and enforcement, again showing just how focused major companies are on their supply chains.

Right now, a wide variety of companies, including just-food, are attending a two-day conference discussing the sustainability of sugar, convened by the Innovation Forum, a London-based company specialising in sustainability events, analysis and training.

Sustainability of agricultural supply chains is also the subject of just-food's latest management briefing, currently being serialised.

The shift in emphasis has been taking place for some years but seems far more visible now and there are reasons for this too. In the first place, the sustainability challenges presented by supply chains are tough. Companies have been talking about addressing them for some while but establishing ways of doing so takes time and engagement with many other stakeholders, not only the suppliers themselves but other actors - NGOs, development agencies, origin country governments and in some instances peer companies.

For example, the launch of CocoaAction is now a catalyst for real change but it takes time to build concerted approaches. Sometimes, the first iterations of such structures need modification as appears to be the case with the RSPO.

By definition, the strategic evolution has moved the companies to areas that are not under their direct control. In truth, some of these companies have such awesome buying power it could be said they have virtually as much "control" over their principal suppliers as they might over any part of their operations, but even if they can wield considerable influence exerting that control will still take more time.

The growing visibility of the push into supply chains is also the result of a growing confidence food and beverage companies have in their approach to sustainability. Some companies speak in terms of feeling more confident and justified in talking to suppliers about sustainability because they have attended to affairs in their own operations. While that does have the ring of rather cute PR about it, there is a sense that companies are more sure of their ground when it comes to sustainability and more prepared to discuss openly even the toughest challenges, which would certainly include agricultural supply chains.

We can expect plenty more such periods of intense activity around agricultural commodities and how the food industry impacts on the communities which produce them.