27 Nov 2014
Still, although it makes ethical sense, sustainability hasn't made much business sense in the eyes of the world's leading corporations. Until now.
"Although it makes ethical sense, sustainability hasn't made much business sense in the eyes of the world's leading corporations - until now."
Tom Cropper, Freelance social enterprise journalist based in the UK
Globally, the world's biggest food and beverage manufacturers are tying sustainability into their food chains. Nespresso has launched a number of sustainable food initiatives, offering better prices to farmers, Olam has a project rejuvenating cocoa farms in Indonesia and McDonald's has signalled a commitment to sourcing its fish from MSC (Marine Stewardship Council) certified sustainable fisheries.
Even Nestle, a company which has had some struggles with its ethical reputation in the past, has leapt onto the bandwagon. Their website highlights a commitment to improved environmental sustainability throughout the lifecycle of their products – from sourcing to use and disposal.
Speaking at a recent roundtable on feeding the world at the Milan 2015 Expo, Anne Roulin, Vice President of nutrition, health, wellness and sustainability for Nestle, admitted the food industry had caused damage in the past but insisted change was in progress.
“It makes good business sense, if not now then certainly in the future," she said. “For example, we're doing research and development on new varieties of coffee and cocoa that are more drought-resistant and higher yielding. This is about creating shared value, not just value for shareholders."
As she hinted, the driving force lies less in the ethical merits of the argument than the business case. Nespresso's initiative, for example, offered price premiums to growers of 10 per cent to 15 per cent above market.
In return it ensured the company could enjoy a continued supply of high quality coffee at a competitive price. In addition it has also managed to make hay with an extensive marketing campaign involving George Clooney.
Not only is he appearing in their advertisements he's also taking part in their recently unveiled Nespresso Sustainability Advisory Board.
Coca-Cola too, via its foundation, has done extensive work with sugar cane growers in northern Australia, working with them to lower the environmental impact. Coke has said the programs recognise two of its major inputs as sugar and water.
In 2014, US retailer Whole Foods undertook a $US20 million nationwide advertising campaign as it sought to reverse its sluggish business performance. A year later and there are signs that it is working.
Profits are up and revenue jumped by nearly 10 per cent on last year. UK retailer Marks & Spencer, meanwhile, believe its Plan A which injects greater sustainability into its business was responsible for generating £105million in 2012.
In Australia, research from Bond University suggests the country is ideally suited to capitalise on the growing demand for organic food. Australia has the most organically farmed land – almost five times as much as Argentina which trailed in a distant second.
By increasing the amount of organic farming undertaken Australian farmers can benefit from this new trend while also helping the world address its food demand crisis.
Veolia, a company which specialises in waste management, has found a surprising way to put its skills and equipment to good use. Their Woodlawn bioreactor takes waste and transforms this into energy. In 2009 it decided to take advantage of the bioreactor to pioneer an innovative aquaculture project.
Using excess heat from the generators, they were able to create the ideal conditions for sustainable fish farming. They now produce 2.5 tonnes of Barramundi every year which is supplied to the Canberra fish market. The project is relatively small, but it has proven that sustainable projects such as this can be commercially viable.
The message from these examples is clear: sustainability is not only good ethics, it's also good business. This benefit comes in two forms. Companies can secure their supply chains, and maintain a cost effective method of accessing the highest quality produce.
Equally, the market is moving in its favour. Customers are increasingly demanding healthier, greener and more sustainable food. Sales are up. New markets are being created and also opportunities. Money Talks; business is listening.
That's good news because the world desperately needs it. The world's population is predicted to hit 9.7 billion in 2050. A rising middle class in Tiger economies such as China, India and Brazil is pushing up demand for meats and other high quality foods.
According to Unesco, demand for food is likely to grow by 70 per cent by 2050. Water consumption is also expected to outpace supply. A recent report suggested that the world will be unable to water its population by as early as 2050.
Australia faces a particularly tough time. A report by the Australian Conservation Foundation found that Australia has a higher rate of water consumption per person than any other country in the world; it has one of the highest per capita rates of greenhouse emissions of any developed country; and the world's highest rate of arable land degradation.
The danger presented to the food supply chain is clear. So too are the social, and environmental benefits behind a drive for sustainable food production. However, progress will come too slowly without another factor – money.
Corporate social responsibility may have evolved over the last ten years, but businesses are still driven by the bottom line and the need to deliver returns to investors. The key development now, is that the business case is easier to make than ever before and that's producing results.
Today sustainability is not only the preserve of the small scale organic farmer. It's attracting the biggest names in the corporate world.
Brands such as Nespresso, Nestle, Coca Cola, McDonalds, KFC and many others are seeking ways to introduce greater sustainability into their supply chain. Such is the scale of their operations that their money, power and market access can generate change on an unprecedented scale.
Proponents of sustainable food have one clear choice. Convince the big boys that the money is there and there's no telling what you can achieve.
Tom Cropper is a freelance social enterprise journalist based in the UK.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
27 Nov 2014
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