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
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
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
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
"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
More information on the report is available here