Sustainability in the Food Industry: A CSR Comparative Analysis of Four Food and Beverage Industry Companies
By: Emily Morris
This report is a comparative analysis of four large companies in the Food and Beverage industry and their Corporate Social Responsibility (CSR) reports. The four companies that this report will analyze are Coca-Cola, Campbell’s, General Mills, and Starbucks. All four of these companies have been named to Corporate Responsibility Magazine’s annual 100 Best Corporate Citizen lists for 2013 and three of the companies were also named to the 2014 list. Ceres in a non-profit organization who partners with investors, companies, and public interest groups to help expand and implement sustainable business practices around the world. The Food and Beverage sectorhas been recognized as the leader in meeting the Ceres Roadmap’sdisclosure expectations. As the leader in disclosure, this sector is considered a good example of what disclosures should look like.
This report begins in Part 1 with the Ceres disclosure expectations for the Food and Beverage sectorand Ceres findings regarding disclosure in this industry. Part 2 will be an analysis of each of the four companies’ CSR reports. Finally, Part 3 will compare the reports and determine how these four companies are comparatively doing in their reporting. This report will analyze these CSR reportsin an attempt to shed light as to why Starbucks was not listed on CR’s Top 100 list in 2014.
- Ceres Disclosure Expectations
In 2010 Ceres released the 21st Century Corporation: The Ceres Roadmap for Sustainability(the Roadmap), to help businesses integrate sustainability practices “from the boardroom to the copy room.” The Roadmap focuses on four key areas, (1) governance, (2) stakeholder engagement, (3) disclosure, and (4) performance. Ceres believes that sustainability needs to be the foundation of the 21st century corporation and that corporations are the key to turning climate change problems into opportunities. The report has 20 key expectations but performance is the biggest priority. Ceres says that tangible performance results “will be the ultimate measure for evaluating a company’s progress toward achieving sustainability.”
The Food and Beverage sector is especially vulnerable to climate changerisks and therefore has a vested interest in implementing sustainability measures in order to help ensure long-term sector success. Ceres has found that the Food and Beverage sector is the leader across the Roadmap disclosure expectations, 54% of companies in this sector are performing in Tiers 1 and 2 for the Roadmap’s governance expectations, and 79% have programs to reduce GHG emissions. Ceres reports the key areas of improved performance in this sector are stakeholder engagement, employee training and support, and supply chain performance. This sector now needs to focus its efforts on water management and human rights, its two most challenging areas that show declines in performance on expectations.
In 2012 Ceres released an assessment of how companies are progressing in implementing sustainability and their uses of the Roadmap framework. This assessment has applied a tiered approach in assessing company performance. There are four tiers: Tier 1: Setting the Pace; Tier 2: Making Progress; Tier 3: Getting on Track; and Tier 4: Starting Out. The Food and Beverage Industry is one of the priority sectors that gets specifically analyzed in this report. The analysis shows areas of leadership and innovation but has an overarching conclusion that three is a long way to go to meet the 2020 timeframe.
- Company CSR Reports
- Coca-Cola
The Coca-Cola Company is the world’s largest beverage company with more than 500 brands, 700,000 system associates, and 250 bottling partners operating in over 200 countries. The companies 2020 Sustainability framework is called “Me, We, World” and provides Coca-Cola’s 2020 Sustainability Commitments.
Coca-Cola’s 2013/2014 Sustainability Report starts out with a letter from the Chairman and CEO, Muhtar Kent. He emphasized the importance that sustainability has in the longevity of the company. Kent says that sustainability efforts “have an essential role to play in helping to mitigate risks and create new business opportunities.” Coca-Cola focuses on three areas of its’ business that Kent believes will have the most long-lasting impact. Kent refers to these three areas as the three W’s: Women, Water, and Well-Being, each of these falls in to one of the three areas of the Sustainability framework.
These three areas each have their own overarching goal. For Women, it is to economically empower 5 million women entrepreneurs within Coca-Cola’s value chain by 2020. The Water goal is to return to communities and nature an equal amount of water used in its beverages and their production, by 2020. The Well-Being goal deals with nutrition, physical activity programs, and recycling. Coca-Cola has a goal of supporting physical activity programs in each of the 200 markets they serve, and are presently serving 290 programs in 125 countries. The packaging initiatives hoped to source 25% of plastic from recycled or renewable material by 2015 but have only reached six percent to date.
Kent recognizes the importance of collaborating with Coca-Cola’s bottling and industry partners, non-governmental organizations, universities, and government agencies to achieve the sustainability goals of Coca-Cola. He calls this the “collaborative power of the ‘Golden Triangle’” which Kent says is business, government and civil society. The Golden Triangle partnerships are imperative to making a material difference in today’s health and environmental issues.
The last thing mentioned in the opening letter from Kent is Coca-Cola’s 2020 Vision Goal. The vision goal is a chart that lists six vision P’s: Profit, People, Portfolio, Partners, Planet, and Productivity. For each vision there are goals, system priorities, and metrics. This vision goal seems to align with the Ceres Roadmap for Sustainability and particularly the Road to 2020: Corporate Progress on the Ceres Roadmap for Sustainability.
Coca-Cola has transitioned to applying the Global Reporting Initiative (GRI) G4 reporting guidelines for their sustainability reporting. This has been applied to its value chain by recognizing the five topics most important to the Company and its stakeholders: active healthy living, human rights, packaging, product and ingredient safety, and water stewardship. These priorities have significant impacts at every stage of the value chain.
The rest of the report is broken in to four areas: Me, We, World, and Reporting. The following is a breakdown of those four areas.
The Me section focuses on well-being and product and ingredient safety. As we all know, there is a global problem with obesity and sedentary lifestyles. Coca-Cola is not a company known for its healthy beverage choices, so as health and wellness becomes more important to consumers and shareholders, Coca-Cola has had to recognize what people want and have responded by providing low-or no-calorie beverages in every market, supplied transparent nutrition information on the front of packaging, supported physical activity programs in every country where it operates, and have ceased advertising to children under the age of 12. While these are all great things, it is important to note that only 800 of the companies 3,500 drink choices globally, are low-and no-calorie. Coca-Cola was smart to focus on physical activity to fight obesity instead of healthier food choices, since that would obviously pose a risk to its’ business. Product and ingredient safety is being supported through making sure all suppliers are meeting Global Food Safety Initiative Standards (GSFI), providing transparent nutrition information about all products for consumers, and committing to making sure all ingredients used are safe, and focusing on the sweeteners used in most beverages.
The We section focuses on building stronger communities. By teaming up with other organizations and partners across the Golden Triangle, Coca-Cola has been able to provide women around the world with skills and opportunities to better support their families. The program 5by20 has a goal of empowering 5 million women by 2020. The Company has $100 million initiative with International Finance Corp. to provide financing and business skills training for businesses operated by women entrepreneurs across the value chain. In 2011, Coca-Cola formally endorsed the UN Guiding Principles on Business and Human Rights and has since implemented all three components of the Principles and is working with suppliers and bottling partners to help them implement the UN Guiding Principles. The Report provides the percentage of suppliers, bottling partners, and company-owned facilities that are complying with the Workplace Rights Policy and the Supplier Guiding Principles. The company continues to give money to relief work, access to critical medicine and medical supplies and through the Coca-Cola Foundation donates at least 1 percent of the yearly operating income.
The World section focuses on protecting the environment through water stewardship, sustainable packaging, climate protection, and sustainable agriculture. Coca-Cola has reduced its water use since 2004, showing an 8% decrease. They have also replenished an estimated 108.5 billion liters of water through 509 community water projects. The water stewardship initiative is progressing strongly through the Golden Triangle partnerships that “encourage the systematic adoption of effective national policy and water management practices around the world.” Sustainable packaging is one of the most important sustainability efforts for the Company. The progress toward a completely recycled bottled hasn’t been great but they continue to encourage recycling in order to increase the supply of recyclable materials. Coca-Cola protects the environment through partnerships with the World Wildlife Fund, installation of HFC-free coolers, increasing energy efficiency, and the conversion of service vans into fuel-efficient hybrid-electric vehicles. The sustainable agriculture strategy is to develop sustainable agriculture crops, sustainably source the key agricultural ingredients, and continue to foster the key partnerships with companies like PwC and TechnoServe who have extensive experience in sustainable agriculture.
The final section of the report is Reporting. Coca-Cola has been working with Ceres for more than a decade. Ceres has helped the company to transparently report to stakeholders and to convene with stakeholders in order to discuss the key areas of importance and concern for them. The company recognizes that stakeholders want to see tangible progress through key metrics and milestones. The long-term success of the company is fostered through effective governance, ethical behavior, accountability, and transparency. The company rewards employees for performance in operating the business in a profitable and sustainable manner.
This report is extremely detailed providing all of the programs, their progress, and the partnerships in a way that makes you feel like you know everything that the Company is doing and where they are planning on going.
- Campbell’s
Campbell’s is a global company with 20,000 employees, operating in 14 countries, and selling products in 100 countries with annual sales of $8.1 billion. Campbell’s Corporate Social Responsibility Report is broken down in to five sections: leadership, strategy, performance, opportunities, and reporting.
The leadership section starts out with President and CEO, Denise Morrison’s letter to shareholders stating that this report outlines the progress in advancing the 2020 Agenda, which established four sustainability and corporate citizenship goals. These four goals are to (1) cut the environmental footprint of our product portfolio in half through water consumption reduction and greenhouse gas (GHG) emission reductions; (2) improvement of the health of young people in the companies hometown communities; (3) provide consumers with nutrition and wellness choices in our product portfolio; and (4) leverage CSR and sustainability as key drivers of employee engagement and performance. The next section explains Campbell’s corporate governance structure. It is encouraging that the company has a VP of Environmental Programs and a VP of Public Affairs and Corporate Responsibility who report the company’s progress on sustainability to the Audit Committee and the Board of Directors annually. The last part of this section is a list of the numerous awards Campbell’s has won for their sustainability programs.
The strategy section opens with Campbell’s CSR approach, noting that in order to be successful in today’s market companies must be proactive and that means responsible corporate behavior that is “focused on accountability, transparency, and engagement.” CSR and sustainability at Campbell’s mean advancing global nutrition and wellness; helping build a more sustainable environment; and honoring its’ role in society, from the farm to the family. Each year the company conducts a strategic planning process where it determines “key business and functional-unit strategic plans and annual performance goals.” The strategic plan for CSR and sustainability has four key pillars, nourishing our planet, consumers, neighbors, and employees. Campbell’s seems to have a great governance structure to make sure their CSR strategic plan is being implemented effectively. The CEO heads the CSR Steering Committee which is made up of senior executives who are informed about CSR performance and provide input on how to further the strategic plan. Additionally there is a Sustainability Leadership Team that defines and reviews the sustainability strategy. The company seems to have a robust system of gathering information from consumers, stakeholders, employees, and supply chain partners to determine the key issues everyone is concerned with and then balancing those issues against the impact on the company’s business.
The next section is a performance measurement. This section opens up with an example of the company’s sustainability progress by highlighting its Napoleon, Ohio processing plant. The plant has 60 acres of solar panels, a recycling program that is currently recycling 89 percent of the plants waste, and an anaerobic digester, the flagship project that is taking the plants waste and creating electricity that is then used to power the plant. A big component of implementing CSR is tying progress to performance and Campbell’s is doing that through its balanced scorecard that ties incentive compensation for employees to CSR and sustainability metrics. The rest of the section is scorecards (like the one to the right) for different sections of the company, providing quantitative data over a four-year period. The scorecards are a great resource but it might be even better if the company provided some analysis of what the numbers represent.
The opportunities section lays out the opportunities CSR and sustainability offer to Campbell’s. The first opportunity the company sees is nutrition and awareness. The Company is dedicated to providing healthy and nutritious food choices to consumers while helping to educate them so that they can make informed food choices. This effort includes supporting school nutrition programs by providing choices for children that are healthy, nutritious, appealing to children, and still attractive to food services operators. The nutrition program extends beyond the choices offered, through Campbell’s numerous programs that provide recipes and tips on how to live a healthier life. Nutrition is one of the keys to addressing obesity and heart disease. Campbell’s has shown their commitment by reducing sodium throughout its’ product portfolio and by providing consumers with fruits, vegetables and whole grains. Food safety and quality is also identified as an opportunity but there are no real specific improvements shown, it mostly seems like fluff. The sustainable agriculture opportunity lists the key measurements and metrics it wants to reach by 2020. These areas are GHG emission reductions, water use reduction, and a reduction in nitrogen fertilizer. The next couple pages discuss Campbell’s community outreach programs as well as the company culture and ethics. The company emphasizes that it is committed to engaging its suppliers to implement CSR and sustainable practices to create a more sustainable supply chain. The company does this through a Supply Base Requirements and Expectations Manual that suppliers must follow and by setting actionable goals for suppliers to meet. Transportation is another key area that Campbell’s has been focused on. The company has removed more than 20,000 trucks from the road, reduced the CO2 emissions by 27,000 tonnes and saved more than 34,000 gallons of diesel fuel. The resource stewardship sections lays out the company’s progress in reducing their energy use, GHG emissions, water use, waste reduction and packaging weight reduction.