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2019-06-14 19:02:44

Dive Brief:A Greenpeace report claimed that not a single company was able to demonstrate meaningful effort to eradicate deforestation from its supply chain. The environmental organization challenged in early 2019 more than 50 CPG companies, retailers and producers to demonstrate their progress by disclosing their cattle, cocoa, dairy, palm oil and soya suppliers. The report analyzed retailers, fast food chains and CPG companies on the fulfillment of the sustainability and anti-deforestation goals published on their websites.Danone, General Mills, Hershey, Kellogg, Kraft Heinz, Nestlé, PepsiCo and J.M. Smucker were among the companies listed in the report that haven't released their progress on these pledges. 

Dive Insight:

As the climate change debate gains momentum, consumers are demanding that companies take a stand and fight back. As a result, sustainable business practices are no longer an option for companies across the food and beverage industry.

Many businesses have announced plans to make their brands more sustainable as a result, but this report questions whether those pledges will become a reality. Greenpeace's report tracked the follow through of companies with sustainability pledges — specifically those tied to deforestation. The non-profit found that none of those who had pledged to reduce deforestation in their supply chain had been successful yet.

However, many of the companies that were investigated have 2020 sustainability pledges, and that technically gives them a year to show results. But until then, this report could foster concern among consumers who care about these promises. The companies did not provide Greenpeace with the name of their suppliers for meat, cocoa, dairy, soy and palm oil, and the report said were hiding behind claims of commercial confidentiality.

Greenpeace said it was denied individual producer names and progress data, so the non-profit was unable to rank these companies favorably based on that. Still, there have been other reports that have shown that many CPG firms have been improving supply chain sustainability — particularly those who require cocoa as a raw commodity.

Nestlé, Lindt, Mars, Mondelez, Cargill and Barry Callebaut have all ramped up their investments and pledges in sustainability in recent years. Cargill, in particular, has had some success with its Cargill Cocoa Promise that encourages better farming practices. 

Ingredients Network reported that cocoa yields jumped by an average of 49% in the 2016-2017 period. Barry Callebaut also has been successful in cleaning up its supply chain, and it recently announced that 44% of its cocoa and 44% of its other ingredients are now sustainably sourced. Hershey also pledged a $500 million investment in West African cocoa sustainability. While Mondelez, Mars and Nestlé were investigated by Greenpeace, Barry Callebaut, Lindt and Cargill — who have moved the needle in their sustainability efforts — were not.

Greenpeace also exclusively looked at the pace of anti-deforestation commitments from companies. Sustainability, however, can span many different components including water savings, recyclability of containers and reduced emissions. In these categories, companies have been making some strides.

Although Nestlé is ranked poorly in the Greenpeace report, two years ago, Nestle Waters announced it received certification from the Alliance for Water Stewardship (AWS) for four bottling facilities. AWS is considered the first comprehensive standard for measuring water stewardship. Nestle Waters has since announced plans to certify 20 factories by 2020, the first beverage company to make such a commitment. 

A recent report by Ceres found two-thirds of the more than 600 of the largest U.S. public companies have committed to reducing greenhouse gas emissions, and over half have formal policies to manage water resources. This visible push toward sustainability is a direct response to consumer demand. About 66% of all consumers are willing to pay more for sustainable brands, and that figure is even higher for millennials (73%) and Generation Z (72%), according to Nielsen.

Consumer perception can be better for companies who commit to complete transparency — something the Greenpeace report said companies are still hesitant to do. Label Insight estimated that manufacturers who adopt complete transparency are rewarded with consumer loyalty rates of about 94%.

While there appears to be a long way to go for many companies, perhaps this Greenpeace report will encourage them to be more upfront about their supply chain producers and practices. If companies can show they are working toward improvements, consumers could reward them with patronage and brand loyalty.

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