Executives of major consumer brand marketers are increasingly concentrating their focus on their sustainability and responsible business practices up and down the value chain. Senior managements are paying attention to their global enterprise value chain, from beginning to end.
For food marketers, as example, that includes greater engagement with their partners at the beginning of the chain: farmers, small growers and suppliers. And at the other end, the all-important consumer reaching for their product at the local supermarket.
For many large marketers, the beginning of the value chain is populated with growers and small “holders,” family farmers located in less developed countries, with small amounts of land, supplying important ingredients for their large customers’ products.
Around the Equator, in countries near “zero degrees” latitude, this especially includes cocoa growers and coffee growers. These small holders are concentrated in a dozen or so such nations as [for coffee] Ethiopia, Kenya, Indonesia, Colombia, Mexico, Ecuador, Brazil, and Costa Rica; and [for cocoa] some of those countries plus Cote d’Ivoire (Ivory Coast), Ghana, Nigeria and Cameroon. For most food companies, countries like Madagascar (for vanilla, found in many food products) are also important production centers.
In the USA, consumers are paying more attention to the sources of ingredients in their food; the method of growing or raising food; conditions on the ground where ingredients are sourced; the treatment of farmers and growers at the source, and more.
Recently, Mark Bittman, prominent food writer and editorial commentator at The New York Times, described his surprise (and delight) at how rapid this rise in interest in “food origin” has been in recent years. (“When I began, nearly five years ago, food was not generally considered as serious a topic as it is now,” he wrote in September in his Sunday Times farewell column.)
Of significance: Mark Bittman, in many of the news stories, commentaries and editorial page columns over the years, identified the major issues “facing us in the interwoven worlds of food, agriculture, nutrition and the environment.” Food & beverage marketers are taking these issues into account as they create their sustainability strategies.
And as more retail customers raise concerns about these and other issues related to the food and beverages they consume, prominent brand marketers are paying close attention. Companies are devising corporate sustainability strategies, operationalizing these, engaging with producers, and reporting on their achievements. (Often this is by publishing a sustainability progress report following the GRI framework, and reporting to CDP on emissions, water, supply chain, forestry practices, and other aspects of their operations, among various disclosure practices.)
Mondelez International – a Proactive Sustainability Journey
An example of corporate sustainability leadership by global brand marketers is Mondelez International (NASDAQ:MDLZ), headquartered in Deerfield, Illinois and marketing its products in over 165 countries.
The company’s “brand family” in the United States includes such well known products as: belVita and Chips Ahoy (biscuits), Dentyne & Trident (gum), Hall’s (lozenges), Triscuits, Wheat Thins, Premium and Ritz (crackers), and Tang (powder beverage); Lu Petit Beurre (cookies), Mikado (cookies), Kinh Do (moon cakes), Stimorol (gum), and other brands that are well known in local markets; and, global brands favored by many consumers, such as Oreo cookies, and Cadbury’s chocolate products. Many of these familiar brands date back a century or more.
The Company’s Core Values
The Mondelez International corporate management team is headed by Irene Rosenfeld, chair and CEO, and includes Robert Marques, EVP and president of North America operations. The core values set in place by the team are built around these seven pillars: (1) Inspire Trust; (2) Act Like Owners; (3) Keep It Simple; (4) Discuss/Decide/Deliver; (5) Tell It Like It Is; (6) Open and Inclusive; (7) Lead From Head and the Heart.
Reporting on the Progress of the Journey
The company’s 2014 Call for Well Being Progress Report describes the specific goals related to the Mindful Snacking theme of the sustainability journey, and the progress made toward it at the end of 2014, with highlights. For example, on the goal of reducing saturated fat in products by 10 percent by 2020 – they noted more progress needed. For increasing whole grains by 20% by 2020 — on target. (Since 2012, MI has increased whole grains by 23% across the entire global product portfolio, and has launched new whole grains products.)
Highlights are available at: http://www.mondelezinternational.com/~/media/mondelezcorporate/uploads/downloads/cfwb2014progressreportataglance.pdf
Concern for Developing Economies
Important ingredients for Mondelez products originate in developing countries, including cocoa and coffee (Note: The company was the world’s #2 coffee marketer. In July, the company combined its coffee business with DE Master Blenders 1753 to create JACOBS DOUWE EGBERTS (JDE), now the world’s leading pure-play coffee company).
There are thousands of small [land] holders/ growers in the company’s supply chain, mostly located across the global Equatorial growing belt (such as in the West Africa region). The company invests millions of dollars in community development, training, and smallholder assistance.
In these (and other regions), climate change issues are front-of-mind. There is also the consideration for Mondelez with its factories around the world (i.e., carbon emissions, water usage, water disposal, etc.).
As many global companies are doing, Mondelez is looking closely at the new Sustainable Development Goals (SDGs) approved this fall at the United Nations. Horrell explains that in terms of gender equality, for example, the work done with small holders includes assistance for the females involved in the growing communities. The goal of eliminating poverty comes into play with the coffee and cocoa belt programs for suppliers. And for the food safety SDG, Mondelez has long been focused on nutrition and food safety.
Stakeholder Engagement
Horrell notes that NGOs play an important role in providing advice and on the ground experience to Mondelez to help the company set strategies and calibrate its actions. For example, World Wildlife Fund has been of great assistance with advice on relations with growers of cocoa and palm oil. Community-based agricultural associations are important partners in key areas.
As director of sustainability, Horrell’s mission is to embed sustainability throughout the business. He is the lead in external engagements, and internally, is the point person bringing business units and functions into the company’s sustainability efforts. His CEO is very involved in the sustainability journey, Horrell notes, and key members of the management team are involved and supportive, as well as the board of directors. (There is a board committee with sustainability responsibilities in the charter).
Among the company’s many recognitions, Horrell points to the Dow Jones Sustainability Indexes (DJSI) — Mondelez has been included in these important sustainable investing benchmarks for the past decade.
Mondelez International has a well-structured materiality process, says Horrell. Engagement with stakeholders is a key element, including investors, customers and suppliers. The materiality process began in 2012 and is regularly reviewed.
Another key element is lifecycle assessment (LCA). The company’s use of LCA to assess environmental impacts has resulted in an end-to-end approach across the whole product life cycle. This requires establishing policies all along the value chain — upstream at the producer level, choice of ingredients, through factory operations, to marketing, distribution, to consumer relations – with a particular focus on raw material sourcing and manufacturing.
Jonathan Horrell’s Background
He joined Mondelez three years ago after a decade’s work with a dairy products chain and several years with Kraft Foods. Jonathan was director of corporate affairs for Kraft Foods in the UK and Ireland, and director of sustainability and global issues management. (In 2012, Kraft was spun off from Mondelez). He comes from a farm family background, which prepares him well for his relations with small holders, he believes. He began his career as a journalist (Accountancy Age, covering UK business, accountancy, finance) after graduation from University College, London (University of London).
Commenting on his work, Horrell says that he sees small steps in the company’s sustainability journey leading to significant positive change. Putting a code of conduct in place for suppliers sends a strong signal as to MI’s expectations of its suppliers, and brings continuing improvements in such as areas as water quality, labor relations, solid waste reduction, and improved production of basic crops. This is true, he explains, in MI’s palm oil and cocoa supply.
MI Chairman & CEO Irene Rosenfeld in her progress report message noted: “When we began our journey three years ago, we set a high bar for ourselves — to create delicious moments of joy. To make that dream a reality, we knew we had the opportunity to grow our business by building a bright future for all of our stakeholders — colleagues, suppliers, farmers and consumers.” That setting of the high bar resulted in the strategy of “Call for Well-Being.”
