London, August 22, 2012. The world's largest food producers need to invest in more robust codes of conduct for the management of environmental issues in the supply chain and set a broader range of targets for improved future performance, according to a new report from independent analyst firm Verdantix.

The study finds significant variation in the ambition and robustness of the sustainable supply chain initiatives of 12 of the world's largest food producers - Associated British Foods (ABF), ConAgra Foods, Danone, General Mills, Heinz, Kellogg, Kraft, Mars, Nestlé, PepsiCo, Sara Lee and Unilever - with collective revenues of $390 billion.

"The world's largest food producers have impressively detailed supplier codes of conduct for social issues such as child labour, collective bargaining, discrimination, health and safety and working hours" commented Rodolphe d'Arjuzon, Global Head of Research at Verdantix.

"They track data effectively using the Sedex platform that runs on Enablon's software platform. But just four of the firms in our study - Danone, Heinz, PepsiCo and Unilever - have invested in wide-ranging codes of conduct to guide the environmental performance of their suppliers."

"The other firms in the food sector need to invest in environmental supply chain policies to anticipate NGO scrutiny, better manage reputational risk, plan for resource scarcity and deal with competitive pressure." noted d'Arjuzon.

"As part of the overhaul of sustainable supply chain strategies, all the firms in the study need to follow Nestlé's lead by establishing targets for standards compliance, supplier training and material sourcing." he added.

Reflecting the significant gaps in performance, the Verdantix report,  Sustainable Supply Chain Benchmark: Food Sector, identifies three potential sustainable supply chain strategies for food producers to follow:

- Leadership strategies mandate environmental and social standards, target 100% sustainable supply of agricultural and raw materials and engage directly with farmers to improve performance. Danone, Heinz, Nestlé and Unilever aspire to implement sustainable supply chain leadership strategies. Typically these firms also have a CEO-led, long-term vision for sustainable business.

-  Opportunistic strategies are motivated by country-specific product sales opportunities - such as Kraft's commitment to source 100% certified sustainable coffee beans - but only in Europe. These firms undertake audits of high-risk suppliers in areas like palm oil and subscribe to industry data sharing platforms to reduce cost and increase the breadth of supplier data collection.

- Baseline sustainable supply chain strategies reflect a reactive, lower cost approach to managing social and environmental issues in the supply chain. For example, ConAgra Foods relies primarily on a North American supply base which reduces its risk profile and need to invest in auditing and enforcement of supplier codes of conduct.

"Some firms invest in superior sustainable supply chain strategies to stay one step ahead of today's agricultural resource scarcity issues. For example, the drought in the American corn belt has pushed corn prices to a record high. They are also motivated by consumer product brand benefits" commented Abbie Curtis, Verdantix Analyst and author of the report.

"But several of the largest food producers still have minimalist approaches to the management of sustainable supply chain issues. Our study clearly identifies multiple factors will cause that to change."

More information on the report is available here