Treading the sustainable path

A growing number of companies in the food sector are taking corporate responsibility seriously.
The pioneers have actively endorsed social and environmental procedures within their business strategies, with more fair trade and a greener food chain the result. But there's still a long way to go before the entire sector reaches an advanced level of sustainability.
Elsevier Food International, Vol. 5, Number 1, February 2002
Vincent Hentzepeter

Last year the German research firm Oekom published a study on the social and environmental performance of international food corporations. Munich-based Oekom applied its Corporate Responsibility Rating (CRR) to the 18 companies that agreed to participate in the assessment. The lower-than-average overall score suggests the industry could do better.

Sustainability ranking

Stora Enso, a Finnish supplier of packaging of the food industry, announced the endorsement of principles for Corporate Social Responsibility on 12 December 2001.

Frank Werner, analyst at Oekom Research, says that the study was completed in January 2001 and is still as up to date as it can be. The highest overall score in the survey was a C + , a grade which three companies received. Thirteen companies received scores ranging between C and D + , and two got a poor D, the lowest grade. So exactly who is making progress in terms of a more sustainable approach towards resources, production and socially responsible behaviour? Says Werner: "To summarise, I can tell you that the most important food companies are only just starting to realise the impact that the issue has on both stakeholders and the environment, and to take action accordingly. The most advanced companies in this respect are Allied Domecq, Procter & Gamble and Unilever."
The study reveals large differences between the ranking of the investigated companies. Why, for instance, does H.J. Heinz receive a D-grade?
After all, the producer is seriously pushing organic brands under its own label. "Heinz organic food line is a very positive developmet that's certainly good for the environment," says Werner. "However, apart from the organic line the company has no mechanisms to support suppliers in producing raw materials in a mar ecological way. The 18 food producing firms that decided to co-operate with Oekorns survey at least showed a certain degree of transparency. "
From the Oekom study it can be concluded the companies are generally continuing to rely on industrialised production methods. Sourcing raw materials from organic farms or sustainable fisheries is not common practice as yet. Moreover, most producers haven't yet considered farming methods that minimise the use of chemicals. However, some firms show forward-thinking initiatives. To counter dwindling fish stocks, for example, Unilever t teamed up with the World Wide Fund for Nature (WWF) to establish the Marine Stewardship Council (MSC) labelling system. The MSC is now a fully independent accreditation body for fisheries sustainability. Unilever is doing pioneering work, having announced that by 2005 it will use only MSC certified fish products. At the Global Conf'erence on Oceans and Coasts, which took place in Paris last December, the multinational campany repeated its markets commitment toward sustainable fisheries. Unilever's intention is part of the business strategy, called the 'Path to Growth', in which financial and brand growth targets also have to be compatible with the path to sustainable development. In both agriculture and fisheries the approach of the FAO (The Food and Agriculture Organisation of the UN) is followed. In terms of sustainability, the fishery plans are most advanced. The global effect of the commitment could be significant given that Unilever processes 90,000 tonnes of frozen fillet a year.
Peter Greim, chairman of Frozen Fish International, a Unilever group company, explains why Unilever has opted for this sustainable strategy. "Our strategy of focusing of the sustainability of our fish supplies is entirely business driven. Unless fisheries are - or become - sustainable there will be no fish, and therefore no profits for our frozen fish brands. This strategy is economically and financially better, and better for the environment because ocean resources and biodiversity are maintained. And consumers now expect responsible companies to take account of natural and community resources."

Important milestones
Unilever's high position in several sustainability rankings is due to a holistic approach throughout the company's business units. Besides fisheries, the focus is on agriculture and water. According to Greim, this makes it easier for observers to see what Unilever has achieved. "We report annually on environmental performance and progress and maintain a comprehensive, continuously updated website of our environmental activities, including case studies. Sustainability is still poorly understood in practical terms. We believe such activities help to show what it actually means."

Although Unilever ranks relatively high in sustainability indexes, the company is, according to Oekom, not even halfway towards reaching its optimum target. When will this top sustainability level be reached, if ever? Says Greim: "Sustainability is a road with important milestones. Our commitment to buy all our fish from sustainable sources by 2005 sets a strong target that should motivate both us and our suppliers. But the agenda for sustainability will evolve as scientific knowledge of the dimensions of sustainability, both social and environmental, increase. This is a long road - not one where the goal is waiting just around the corner."

Chiquita's commitment
Though in most cases their attitude is less advanced than that of Unilever, an increasing number of A-brand producers have begun to incorporate sustainability into their core business strategy. For instance, Chiquita Brands International Inc. took a significant step forward last September. The company released its first Corporate Responsibility Report. This comprehensive assessment of its environmental, social and financial performance focuses on Chiquita's banana sourcing operations in Latin America. The report contains details about the company's performance in relation to its core values. These include the 100 per cent certification that its company-owned farms in Latin America have met the environmental and social standards of the Rainforest Alliance's Better Banana Project, and the degree of its compliance with the international labour standard Social Accountability 8000 (SA8000). "In late 1998, as part of our ongoing social and environmental efforts, we undertook a formal commitment to Corporate Responsibility. We have published this report as a signal of our progress," said Jeff Zalla, corporate responsibility officer.

Positive attitude
Further downstream in the food supply chain, sustainability is also becoming a topic on the agenda. For instance in the packaging sector, Stora Enso, a Finnish supplier of packaging board for the food industry, announced the endorsement of principles for Corporate Social Responsibility on 2 December 2001. These principles focus on the social and socio-economic aspects of sustainability, and the group already has a strong record on financial performance and environmental management systems. The principles are based on internationally accepted statements, such as the United Nations Universal Declaration of Human Rights and the core ILO conventions. Stora Enso's CEO, Jukka Harrnala thinks this is the next step towards full corporate responsibility: "Historically, many communities developed around sawmills or paper mills, and responsibility was typically a local concept, but today one must also consider responsibility at a global level. At a time of intensifying consolidation, responsibility in all operations is the way to prepare for a truly global presence."
The growing attention that both suppliers and producers are paying to sustainability matters should lead to the creation of a more sustainable food chain. Those who lag behind will, in the long run, pay a price for their lack of commitment, with those who adapt a positive attitude towards sustainability gaining a preferred status with the consumer.