How to expand your business sustainably: it all starts with your supply chain
The 2016 CEO Study published by Accenture and the United Nations Global Compact boldly claims that a "staggering 97% of CEO's interviewed believe that sustainability is important to the future success of their business". Despite being reminiscent of the 97% of scientists that agree on climate change, clearly, we are at a point in time where the question around business expansion is not can, but rather how, does a business grow sustainably and where should it focus its efforts?
Naturally, companies tend to start with the quick wins that sit within their operational control; those which are proven technologies, widely accepted by industry and have tolerable payback periods (energy efficiency measures, renewable technologies and staff engagement programmes are all popular choices). This can be a necessary path for many companies if their Board requires some convincing before the more challenging areas of the organisation can be properly resourced.
But with the low hanging fruit well and truly picked for many organisations, attention is now turning to their supply chains. Staggeringly, the Carbon Disclosure Project reported in 2017 that Scope 3 emissions for a typical business are four times greater than those reported for direct operational activities. Yet awareness remains low and the reporting landscape is woefully lagging, with limited guidance available to support companies in navigating the waters of their seemingly distant supply chains.
This is particularly prominent in the Food and Beverage, Chemicals, Cosmetics and Textile industries, which at their core, rely on agricultural supply chains to source raw materials and generate profits. These industries are already feeling the effects of a changing climate with commodity products such as cocoa and coffee highly susceptible to even the smallest fluctuations in rainfall and soil acidity. Despite this, no agreed methodology exists to measure and report on some of the most carbon intensive activities, such as land use change (primarily deforestation), which the CDP estimates to be responsible for over 10% of global greenhouse gas emissions.
On the frontline of a changing climate, businesses are at risk from resource scarcity and environmental degradation within their own supply chains and the wide-ranging impacts of industrial agriculture are also compromising the ability of future generations to meet their most basic food needs. Demand for the products and services offered by these industries is growing and whilst it may seem like a daunting task to embark upon, a number of organisations have been making promising inroads into transforming their supply chains, creating resilience and improving communities worldwide.
Mars – Sustainable in a Generation
You would, of course, have seen the recent unveiling of Mars’ $1 billion Sustainable in a Generation strategy, which has set an ambitious science-based target of 67% emissions reduction (covering both its operations and supply chain), and extended commitments on renewable electricity, packaging, water, land use and human rights. Mars recognises the responsibility it has to ensuring the success and growth of the company protects its workers and the environment and has put sourcing at the heart of its strategy.
The updated Responsible Sourcing programme now covers 60% of Mars’ raw materials and places emphasis on collaboration across the value chain, from directly engaging with small holders on sustainable land management to “produce more with less”, to investing in certification schemes and teaming up with universities and research centres to advance agricultural science (the Cacao Genome Project is a brilliant example of this). Mars has seen its sustainability strategy evolve over the past 10 years and has now taken the plunge, diving head first into its supply chain to join the ranks of Unilever and Marks & Spencer.
Unilever – Sustainable Living Plan
Unilever has long been lauded for its efforts in this sphere and can proudly lay claim to a multitude of initiatives introduced under its Sustainable Living Plan in 2010, and which are now propelling the company towards its 2030 targets whilst ensuring the continued growth of the company.
“Our Sustainable Living brands accounted for nearly half our growth in 2015 and grew faster than the rest of our business.”
Similarly to Mars, Unilever’s somewhat matured strategy has a strong focus on sourcing and aims to bring sustainable agriculture into the mainstream. In 2016, Unilever reported that 51% of its agricultural raw materials were sustainably sourced with an aspiration to raise this to 100% by 2020 for its key commodities; palm oil, soy, paper and pulp, and tea. The commitment to “eliminating deforestation” in the production of these raw materials stands tall, with certification schemes (FSC, Fairtrade, Rainforest Alliance, RSPO and RTRS) playing a crucial role in securing compliance with standards and transparency across the supply chain.
Unilever’s homegrown Sustainable Agriculture Code also provides a platform for assessing performance and requires close engagement with over 500,000 smallholder farmers – no small feat! To ensure the success of its Sustainable Living Plan, Unilever is investing heavily in R&D to safeguard the production of its raw materials and has also made up to €1 million available per year for smallholders to move away from resource intensive growing methods and towards more sustainable practices. Looking to the future, Unilever is an outspoken advocate for “whole-system change” to decarbonise the sector and is leveraging its influence as one of the largest buyers of agricultural products to collaborate with governments, NGOs and industry to drive this.
M&S – Plan A
Alongside these industry giants, M&S as a retailer with over a decade of experience in sustainability, has its fair share of ambitious strategies, targets and policies in place to reduce emissions and improve conditions across its supply chain. Some exciting developments are beginning to emerge in its approach to sourcing and just earlier this month, a new partnership was announced between M&S and Growing Underground, adding a fresh layer of gloss to the company’s already shining reputation.
“Working with others to find innovative solutions to complex and systemic issues that we can’t tackle alone”
Growing Underground is a “sustainable and pesticide-free farm”, located some 30 metres beneath the busy streets of South London and is helping to reduce M&S’s reliance on food imports. The company is able to grow organic produce throughout the year by making use of hydroponic systems which have reduced its water demand by 70% and LED technologies. Questioning the conventional approach to sourcing, nurturing innovation and redefining what good environmental and social leadership looks like is a necessity if we are to meet the demands of an expanding population, in a world of finite resources and no planet B.
For others, sustainability is not a strategy that was adopted at a point time but is, instead, a part of their DNA. The Body Shop, Lush and Pukka Herbs have all grown with strong environmental and social principles at their core and now provide inspiration to the next generation of SMEs looking to follow in their footsteps. Irrespective of size, businesses can absolutely be a force for good whilst continuing to hit anticipated growth rates. Start by embracing the challenges presented by your operations and supply chain and use carbon footprinting as a tool for identifying emission hot spots. Over 300 companies have now set science-based targets and many have visibly interwoven the UN’s Sustainable Development Goals into their own – be an advocate of this.
Setting policies, increasing the level of certification and engaging with suppliers will then follow, bringing about long-lasting benefits and ensuring you are well placed to collaborate with others and capitalise on new opportunities. The future is looking bright(er) and as Paul Polman so delightfully puts it, “There is overwhelming evidence that the transition to a thriving, clean economy is inevitable, irreversible — and irresistible.”
Eleanor Jeffrey is a senior consultant at Carbon Smart