Water and agriculture go hand in hand. Growing food for the planet’s people consumes 70 percent of its freshwater sources. Therefore, water is not only life-giving, it is life-sustaining. Yet with climate change, population growth and development on watersheds, an estimated 2 billion people globally face limited access to clean water. And demand for water is expected to grow by 30 percent globally by 2050. Because agriculture uses the majority of water – and research indicates that water uncertainty is one of the largest risks facing the $5 trillion industry – it makes sense that many agriculture and food companies are concerned about water and the climate change-aggravating water scarcity issues. At the same time, agriculture is a contributor both to climate change and to water quality and availability challenges. Worldwide, agriculture and food production account for about 13 percent of greenhouse gas (GHG) emissions, according to the World Health Organization, principally from ruminant animals such as cows and pigs emitting methane. When crop fields are fertilized too heavily, the excess nutrients can run off into waterways. Then, of course, the day-to-day agricultural operations of trucking commodities and energy use also produce emissions. During the Global Climate Action Summit held in September in San Francisco, two entire days were devoted to water discussions at the affiliated Water Pavilion. The conveners of the Pavilion saw the critical need to highlight to the climate community that “water is climate” and the extreme importance of focusing attention on water-related opportunities and impacts. To this end, as a member of the Steering Committee, I helped facilitate a discussion about the importance of water stewardship in the food industry, the good work underway and what more needs to be done. Ceres’ partners, Clif Bar, Driscoll’s and General Mills, joined me in discussing how food and beverage companies can work with their agricultural global supply chains to improve water stewardship and water availability, not just for growing their crops but also for local communities. We also talked about the importance of engaging with decision-makers around these issues and supporting good public policy on water management through Ceres’ Connect the Drops collaboration. These three companies – along with 34 other major corporations – are part of Connect the Drops. General Mills talked about its work collaborating with other local water users, communities and NGOs to protect the most at-risk watersheds. Recognizing that the bulk of GHG emissions affiliated with General Mills products comes out of its supply chain operations, the company set a goal to reduce emissions by 28 percent across its value chain by 2025 (from 2010). Its Natural & Organic Operating Unit has encouraged farmers to use practices that sharply reduce impacts on water. Clif Bar noted its focus on holistic farming practices, approaches that conserve water and avoid the use of chemical fertilizers in order to minimize farming’s impact on local water resources. Driscoll’s, whose fresh berry business thrives on good relations with its farmers, talked about its collaborations with its farmers on ways to grow and how to preserve water quality and water availability for all who use it. Driscoll’s provides extensive education opportunities and incentives for its farmers to use practices that conserve water and minimize impacts on natural waterways. At Ceres, we research water issues and work with companies to identify the most effective ways for them to address the local water challenges they are facing throughout their value chain. Through an initiative launched by Ceres and the World Wildlife Fund that we call the AgWater Challenge, we highlight companies that engage in good water stewardship by working to preserve water, by replenishing fresh water sources through the restoration of watersheds and groundwater basins, and by being innovative in water reuse and finding other ways to maximize water use and promote smart water management policy. Two years ago we named seven companies as AgWater Stewards: DanoneWave, Diageo, General Mills, Hain Celestial Group, Hormel Foods, Kellogg Company and PepsiCo. In October we will be highlighting a new group of AgWater Stewards. Many food companies and their agricultural suppliers have adopted practices that both address water quality challenges and help reduce GHG emissions – farming practices such as no-till planting, use of cover crops during off-seasons to restore soil nutrients, and multipaddock grazing. These practices can improve soil health and boost the soil’s ability to absorb carbon from the air. Thanks to farmers who adopt conservation farming practices that address water quality challenges and reduce emissions, we are starting to see how agriculture can be part of the solution to climate change and water scarcity. We need to learn from the good work being undertaken and broaden the tent so that we get to the scale that is needed to secure our water resources. This post originally appeared on Water Deeply.
by Brooke Barton, Senior Director, Water and Food, Ceres Hurricane Florence is only the latest environmental, financial and reputational calamity to hit the nation’s vast livestock industry this year. Even before last month’s torrential rains caused widespread losses and flooding in hog waste lagoons across North Carolina, meat producers had come under growing pressure due to extensive pollution from their sprawling factory farms, which confine thousands of hogs and chickens in tightly packed facilities. Noxious odors from football field-sized waste pits have prompted dozens of nuisance lawsuits by local neighbors in Iowa and North Carolina, two of which have resulted in favorable jury verdicts and financial damages. Harmful runoff into local waterways have triggered civil and criminal cases across the Midwest. Investor inquiries to companies about their ability to limit these pollution impacts have also been mounting, as is public pressure on state legislatures to crack down on the industry. Many of these pressures are expected to grow as climate change and more extreme weather events trigger more disasters for the industry, which is especially concentrated in poor, rural areas in the Midwest and Southeast. Floodwaters from Hurricane Florence caused dozens of hog waste lagoons to overflow, leaving trails of floating excrement that compromised local waterways and drinking water supplies. More than 3.4 million chickens, turkeys and hogs were killed, and the hurricane also forced plant closures, including the world’s largest hog plant operated by Smithfield Foods (WHGRF). Sanderson Farms (SAFM), the country’s third largest poultry producer, lost more than 1.7 million chickens to flooding. The losses come fresh on the heels of Hurricane Matthew in 2016, which caused similar damages, much of it from overflowing livestock farms. The United States’ livestock industry produces 335 million tons of untreated animal manure annually. (In comparison, the U.S. human population produces 7 million tons of waste annually, the majority of which is treated by public wastewater utilities). This vast stockpile of poorly stored animal manure is a burgeoning liability to a growing U.S. meat and livestock industry, and especially risky in the context of the ever-wilder weather we see tied to climate change. The irony is that livestock production is also a major and growing contributor to global warming -- producing approximately 15% of annual global greenhouse gas emissions—so these risks are at least partially self-inflicted wounds. A small number of industry players have taken steps address the twin impacts of water and climate pollution, but to date overall industry response has been tepid. When 40 of the world’s largest food producers were ranked by Ceres last year on their management of water risks, meat sector companies had the lowest overall scores, averaging only 15 points on a scale of 1 to 100. Similarly, very few meat companies have set climate targets that address the large-scale impacts of animal and feed-related emissions. As the water pollution-climate change connections accelerate, some in the investment community have begun asking “Big Meat” to identify how these impacts translate into bottom line regulatory, reputational and market risks. In 2016, 45 institutional investors and debt holders sent letters to major livestock companies – including Smithfield Foods, Cargill and JBS/Pilgrim’s Pride (PPC) – requesting that they address significant water-related risks associated with feeding, slaughtering and processing livestock. Investors followed up by filing shareholder resolutions this year with Tyson Foods (TSN) and Pilgrim’s Pride. The Tyson resolution was supported by 63 percent of the company’s independent shareholders. The company subsequently committed to improve water, soil and fertilizer practices on two million acres of its supplier land and to take additional measures to reduce water runoff and soil losses. To date, meat companies have also been slow to set greenhouse gas emissions targets and disclose their climate risks in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures. Nevertheless, major meat buyers are increasingly issuing their own directions for their suppliers. McDonald’s recently committed to lower the greenhouse gas intensity across its entire food supply chain by 31 percent by 2030. Wal-Mart, through its Project Gigaton, is asking its supplier base, including meat suppliers, to eliminate a total of one gigaton of emissions by 2030 – the equivalent to taking more than 211 million passenger vehicles off of U.S. roads and highways for a year. While these actions are encouraging, growing pollution pressures and extreme weather events mean that the meat and livestock industries’ outsized impacts and risks will require bigger responses. Maintaining public trust and their license to operate will require much more, including rethinking the siting practices of new animal feeding operations, the adoption of far safer manure management models, and providing much needed incentives for contract animal and feed suppliers to adopt more sustainable practices.
Written by Eliza Roberts, Senior Manager, Water, Ceres Tyson Foods, the largest meat company in the U.S., is starting to step up to the plate on sustainability and respond to pressure from investors and consumers to tackle water risks in its supply chain. Recently, the company made a commitment to improve the water, soil and fertilizer practices in its far-flung feed grain supply chain — impacting more than two million acres of corn production by 2020, or about half of its corn supply chain. The measures have strong potential to both improve water quality and reduce greenhouse gas emissions. Tyson’s move sends a strong signal to the rest of the meat sector that driving down the massive environmental impacts of growing animal feed is a smart business strategy. Despite this positive news, Tyson has not yet made its implementation plan public — and the devil is always in the details. Moreover, Tyson has a steep hill to climb. The company got just 11 out of 100 points in Ceres’ 2017 Feeding Ourselves Thirsty ranking of how food sector companies are tackling water challenges across their value chain. The Environmental Protection Agency, meanwhile, ranked Tyson as the second-highest polluter in its 2016 Toxic Release Inventory. Among many critical steps for Tyson to consider when setting and implementing sustainable sourcing commitments, farmer engagement is key. Setting a goal that does not have grower support will not succeed. Any company with sustainable sourcing goals must find creative ways to support and incentivize farmers to improve practices, share data and reduce their impact on watersheds. Here are four key ways for companies to do that: Collect and share grower data Data is critical to understanding agricultural water impacts and how to reduce them. However, supplier survey fatigue is real. Growers receive dozens of requests from buyers to fill out lengthy surveys that vary dramatically, requiring additional time and resources. Some 57 percent of companies benchmarked by Ceres are asking for water-related data from growers, and in most cases growers are asked to provide data without knowing how it will be used, who owns it, or whether or not they will have the ability to gain insight from that data in the future. Ensuring that data collection is not a one-way street and that there is trust and value for the grower in sharing data are key. Campbell Soup’s approach to data collection puts the emphasis on transparency. Instead of a one-way siphoning up of data, Campbell anonymizes and aggregates the information and shares it back with growers so they can track their own improvement relative to other farmers and learn where there’s room for change. The data help Campbell make the business case to growers for adopting more sustainable soil healthand water management practices. Provide education or assistance for growers The food sector is doing more to engage growers, with 71 percent of companies we benchmarked providing some form of educational support to growers on sustainable agricultural practices, double the number from 2015. Many companies are hiring agronomists or leveraging in-house agronomists to conduct trainings for farmers. Others are collaborating with customers that source directly from growers. Others are forming partnerships with agricultural retailers that are well-positioned to advise farmers on their practices. For instance, Land O’Lakes SUSTAIN — a business unit of farmer-owned cooperative Land O’Lakes — has sustainable agriculture experts working with thousands of farmers across millions of acres of farmland in partnership with companies, including Campbell and Walmart, to help advance their company-level sustainability goals. Provide financial incentives Just 26 percent of companies benchmarked by Ceres provide some form of financial incentives to growers to improve conservation practices. That’s twice as many as in 2015, but still low. While many companies think of financial incentives as providing premiums, there are a number of innovative ways to provide incentives to farmers, ranging from giving low- or no-interest loans to growers to invest in water-saving irrigation technologies, to de-risking adoption of new farming practices by offering growers financial guarantees or longer-term contracts if they adopt new practices. Examples in this vein include Unilever’s Knorr fund, through which the company invests 50 percent out of a pool of €1 million into projects that enable growers to try out new ideas and speed up the implementation of sustainable agriculture practices. Mars, for its Uncle Ben’s brand, pays a premium to rice farmers that adhere to its sustainable sourcing guidelines. Target financial and educational support to the highest-risk areas Prioritizing support is just as important as providing it. Some water resources and growing regions are more critical than others for a company and a community. And while water scarcity may be a major issue in one watershed, water quality may be the biggest challenge in another. Leading companies are doing analyses to determine which water sources are the most critical and the most endangered to tailor their aid. For instance, Kellogg’s has developed custom on-the-ground programs for growers in key at-risk regions, including in Louisiana, Thailand and Bangladesh. These programs support 17,000 agricultural suppliers, millers and farmers in 22 different countries to improve water use and watershed quality. It’s commendable that Tyson is joining with leading food and beverage companies in setting sustainable sourcing goals that address water quality challenges. But to deliver on those goals, Tyson — and all other food companies — need to make grower engagement front and center. Farmers will be the linchpin to their success. Read the original blog on Sustainable Brands
Written by Brooke Barton, Senior Director, Food and Water, Ceres Cape Town may reach “zero water day,” this June and literally turn off the spigot for some four million residents. Prolonged drought in South Africa is a major factor in the city’s water crisis, which is a foretaste of what other municipalities around the world may face--that is, unless companies, investors and governments step up their stewardship of the world’s finite water resources. I am hopeful that Cape Town will continue to stave off its impending water emergency, as it has been able to do these past few months, through both urgent and longer-term actions to ensure more sustainable water supplies. In fact, Cape Town’s approach to solving its water crisis is one of four positive trends that keep me going in the face of mounting challenges. On World Water Day 2018, I’d like to highlight these positive trends. The Food and Beverage Sector Continues to Lead A recent Ceres analysis, Turning Point, found that more than half (55 percent) of the 600+ largest publicly traded companies in the U.S. have at least general commitments to manage water resources through efforts such as water efficiency. Among those companies, the food and beverage sector outperforms, with 100 percent of companies committing to water conservation. Setting broad-based water management goals is an essential first step for companies in water-intensive sectors, like the food industry, but they need to go further. They need to set time-bound targets in parts of the value chain with the highest water risks and pollution impacts. Here again, food companies performed better in our analysis than other sectors, with 57 percent taking this step in comparison to just 15 percent overall. Agricultural supply chains are where food companies need to do the most work. It’s where the vast majority of their water risk lies; yet few have acted in a robust manner at this level. General Mills is a stand out example for managing water risks across its agricultural supply chain. The food giant worked with The Nature Conservancy to complete a global water risk assessment of all its production facilities and growing regions, identifying eight high-risk watersheds--such as the Ganges River in west-central India. Among a range of steps to address its water impacts, the company committed to sustainably source 100 percent of its top 10 ingredients (palm oil, fiber packaging, wheat, oats, sugar beets, vanilla, cocoa, dairy, corn and sugarcane) representing more than 40 percent of annual raw material purchases, by 2020. General Mill's Applied Sustainability Manager Jeff Hanratty meets with farmers in Madhya Pradesh region in west-central India. Portfolio Water Footprinting Gains a Foothold Water footprinting helps to identify water use patterns. Until recently, the analytical tool was most commonly used by companies to assess the amount of water used to produce specific goods or services. Now investors are adapting the tool to identify water risks across entire investment portfolios. And while methodologies are still evolving, it’s an important development that can help focus investor attention on the sectors and companies most exposed to water risk. The Dutch asset manager ACTIAM and Florida’s State Board of Administration (SBA) are pioneers of this emerging trend. Florida SBA, which manages the country’s fifth largest public pension fund, developed a water footprint analysis by combining external data sets with its own internal portfolio information. The water footprint, also called a heat map, shows Florida SBA’s water risk exposure within a $15 billion passive portfolio, with investments in 11 sectors of the economy. The heat map provides portfolio managers with a quick visual of where the greatest water risks lie, by illustrating where the portfolio has large sector holdings (size of the square), and which holdings within a sector have the greatest potential risk (color, with red being highest). Portfolio managers can then drill down further to the holding level. Analyses like these can help investment teams to develop quick assessment capabilities, while supporting and identifying priority areas for further research, integration of water risks into buy-sell decisions and direct engagement with poor performing companies. Water risk heat map of a public pension fund's $15 billion passive portfolio. Red equals high risk, black is medium and green is low risk. Size of the square reflects size of the holding. Animal Feed Sustainability is Gaining Steam Animal production consumes a lot of water globally, and the vast majority of that water is used to irrigate feed crops, like corn, soy and alfalfa. In fact, the irrigation of feed crops consumes 12 percent of the world’s groundwater and surface water. What’s more, feed crop production contributes substantially to water pollution as fertilizers used to boost production spill into local waterways, causing algal blooms and dead zones worldwide. Water use and pollution are not the only sustainability concerns associated with animal feed. A growing movement that seeks to comprehensively address animal feed’s impacts—from water quality to greenhouse gas emissions to competition for land and biodiversity loss —offers a lot of promise. Food company-NGO collaborations like Protein Challenge 2040 are seeking to innovate new types of animal feed that would, not only reduce the amount of land devoted to feed crops (about 50 percent of total agricultural land) but also help address the global water crisis. One such solution is to diversify into other protein-rich feed crops, like legumes or oats. Rotating corn and soy with oats, wheat, barley, rye or triticale, for example, can also help to reduce the use of fertilizers, while improving soil health and productivity--and ultimately water quality. The British supermarket Waitrose is participating in the Sustainable Forage Protein project, a 5-year collaboration between eight of Waitrose’s commercial farms, researchers and processors to reduce the dependency on imported soy protein. Farmers are growing protein-rich forage crops on their own farms, as chicory, lucerne and red and white clover. They are also experimenting with fava beans as a long-term soy replacement for chicken, pigs, ducks and salmon. Green Bonds Can Help Cities Finance Sustainable Water Infrastructure Green bonds are a financial instrument for earmarking private financing to fund environmental projects, like sustainable water infrastructure projects. Their issuance has steadily grown over the past decade, reaching about $160 billion in 2017, and they are poised for further growth. Just this week, former UN climate chief Christiana Figueres, along with Ceres and other NGOs urged cities, governments and large companies to join a new Green Bond Pledge that seeks to boost green bond issuance to $1 trillion a year by 2020, to mitigate climate and water impacts. The Climate Bond Initiative (CBI) is also helping grow the green bonds market by developing certification standards, such as for water infrastructure projects, to ensure that any bonds labelled as green are indeed financing projects with robust environmental outcomes. Cape Town was one of the first cities in the world to issue a CBI-certified green bond for water infrastructure. This is why I am hopeful that the city will emerge from its short-term water crisis to become a model for other cities with urgent water infrastructure needs. Issued last summer, the bonds will help fund and refinance the city’s emergency water-supply schemes designed to address the severe water shortage, such as: upgrading reservoirs, implementing pressure-management systems with zone and valve metering, transforming wastewater into potable water, and replacing and upgrading sewers and sewer pumps. Medium- and long-term programs financed by the bond include encouraging new design, innovation and technology in public infrastructure and private households to save water, while also embracing more fully small-scale, decentralized water augmentation schemes. Thus far, the short-term schemes appear to be making a difference. From green bonds to portfolio water footprinting to efforts by food companies to tackle agricultural water sustainability, these emerging trends offer me hope that a more sustainable water future is within our grasp. Read the original blog on National Geographic
Written by Eliza Roberts, Lindsay Bass Cape Town, South Africa could run out of water in a few months, literally turning off the spigot for some four million residents. If a solution to the crisis is not found, social unrest is feared. Beyond the human rights concerns, the region’s vegetable, citrus, grape and nut growers may face shortages as 40 percent of Western Cape Town’s water is currently allocated to agriculture. This frightening scenario may play out with increasing frequency around the world, as population growth, water pollution and climate change place further stress on dwindling water resources. Forty percent of water demand is unlikely to be met by 2030, according to a recent U.N. report, and the value at risk to business is estimated at $63 trillion. Food companies, whose supply chains rely on 70 percent of the world’s water, ought to be paying attention. And some are, as evidenced by the significant growth in agricultural sustainability standards that in recent years have come to represent a key mechanism through which large multinational firms address their sustainability goals, including for water. To spur further growth in this promising area, Ceres and the World Wildlife Fund (WWF) created the AgWater Challenge, a joint initiative to help companies advance their sustainable sourcing strategies. Through the AgWater Challenge, Ceres and WWF work together with food and beverage companies to develop stronger, more transparent water stewardship commitments in agricultural supply chains. Launched in 2016, with an inaugural group of seven companies — Diageo, General Mills, Hain Celestial Group, Hormel Foods, Kellogg Company, PepsiCo, and DanoneWave (formerly WhiteWave Foods) — the AgWater Challenge is now open to new food and beverage companies seeking to embrace water stewardship beyond their four walls. Companies that join the challenge receive technical support from Ceres and WWF (and other NGO partners) in analyzing water issues within their supply chains, and in refining or making new sourcing commitments that enable them to better address their risk. Participating companies benefit from the opportunities for peer-to-peer learning on best practices for managing water risks, setting time-bound goals and engaging with growers. Among the commitments recognized by the AgWater Challenge in 2016: General Mills completed a comprehensive risk assessment through which it identified eight high-risk watershed regions globally, including California. It pledged to develop water stewardship plans for these regions by 2025 by working with NGOs, farmers and other stakeholders. Hormel Foods’ plans include the development of a comprehensive water stewardship policy with management expectations that surpass regulatory compliance for its major suppliers, contract animal growers and growers that supply animal feed. Kellogg committed to responsibly source its global 10 priority ingredients by 2020 through continuous improvement for row crops via water and fertilizer use metrics. The company’s water sustainability efforts are supporting 17,000 agricultural suppliers, millers and farmers across 22 countries helping them optimize water use and enhance watershed quality. PepsiCo committed to working with its agricultural suppliers to improve water efficiency within its supply chain by 15 percent by 2025 (using a 2015 baseline) in high water risk sourcing areas, with a specific focus on India and Mexico. PepsiCo’s AgWater Challenge goals cover all of its major crops directly sourced, such as potatoes, corn, oats and citrus, as well as other key commodities directly contracted and indirectly procured. These companies’ commitments reflect their understanding that, as major global food brands, they can be a powerful and constructive force for scaling water stewardship, especially at the farm level — where the biggest footprint is by far. And they’re not alone in seeing the rising risks to our water supply. Sixty-eight percent of companies believe that exposure to water risk could generate a substantive change in their business, operations or revenue, according to a 2014 Carbon Disclosure Project (CDP) report. For food companies, sustainable sourcing is a smart strategy for mitigating water risk, and the AgWater Challenge is a resource for companies wherever they may be on their journey for water stewardship. As Jerry Lynch, Chief Sustainability Officer at General Mills, put it, “The challenges facing our company and our planet are more pressing than ever, so we have to build resiliency in our supply chains to ensure that we can continue to serve the world by making food people love. Our ambition through the AgWater Challenge and all of our water initiatives is to lead by example and we hope to encourage others to do the same.” To join, please contact Lindsay Bass, WWF Manager for US Corporate Water Stewardship or Eliza Roberts, Ceres Senior Manager for Agriculture Water Stewardship. Read the original blog on Sustainable Brands
Written by Eliza Roberts, Senior Manager, Water, Ceres As Cape Town struggles to keep the taps flowing amid the worst drought in a century, agriculture is taking a hit. Water restrictions have especially impacted the fruit and vegetable industries, with 80 percent fewer potatoes being planted this season, for example. The unfolding water crisis in South Africa may play out with increasing frequency around the world, as population growth, water pollution and climate change stress dwindling water resources. Procuring ingredients from water-stressed regions is becoming riskier. That’s why a growing number of companies are seeking to minimize their risks by setting goals to source key commodities sustainably—or, in ways that reduce the environmental and social impacts of growing those crops. In fact, more than half of the 42 companies ranked in Ceres’ analysis of how the food sector is responding to water risk have set sustainable sourcing goals for some of their major commodities. The problem is, too often, these sustainable sourcing commitments aren’t backed by robust directives or incentives for internal procurement teams. And without the support of procurement –the corporate function that optimizes supply security and quality, while minimizing costs and price volatility–companies are unlikely to solve the massive agricultural sustainability risks they’ve identified. Some 70 percent of the companies we ranked haven’t taken steps to integrate sustainability commitments into their procurement processes. This means that their procurement teams and suppliers aren’t up to date on the company’s sustainability commitments. Buyers aren’t equipped with the understanding they need to decide which suppliers they should source from and what kinds of obligations they should include in contracts. And companies aren’t tracking whether suppliers are following through on commitments the company has set. While a growing number of companies recognize this disconnect between sustainable sourcing goals and procurement as a key obstacle to achieving their sustainability commitments, few are digging in to address it. Campbell Soup, Mars, ABInBev and Group Danone are among those who are. One of Campbell’s key steps is placing people with sustainability expertise into the procurement department. Two formal positions now integrate sustainability and procurement, including the Director of Responsible Sourcing, who has CSR and sustainability expertise, sits on the leadership team and reports to the Chief Procurement Officer. According to Dave Stangis, Vice President for Corporate Responsibility and Chief Sustainability Officer for Campbell Soup, embedding these roles within the procurement team makes training buyers on sustainability commitments, and the supplier expectations that flow from them, more organic. “The company benefits when the department that delivers on those commitments is also the one that makes them,” says Stangis. At the same time, Campbell has also built a roadmap for responsibly sourcing its priority ingredients, and trains buyers on using this roadmap with updated supplier expectations. As a result, the supplier expectations are now incorporated into the suppliers’ contracts, and the procurement team is advancing more strategic conversations with suppliers about what sustainability and transparency look like. The company still has work to do. Says Stangis: “We’ll consider ourselves successful when we can speak with our suppliers about sustainability as something that is better all-around from a cost savings, relationship building, quality and economic point of view.” Like Campbell, Mars has embedded sustainability roles into the procurement department at the highest level. Its long-time Chief Sustainability Officer, Barry Parkin, has assumed the lead role in procurement, according to Mars spokesperson, Lisa Manley. The company has also set impressive science-based goals for reducing its impact on land, water and farmer communities, and is working to integrate these into the procurement process, with an emphasis on its top 10 ingredients. Mars trains its buyers on sustainability commitments, embedding details about sustainable sourcing into supplier contracts, and it works closely with its suppliers, sharing its commitments and developing farmer partnerships. It offers agronomist support and farmer training, and pays a small premium to rice farmers who adhere to its sustainable sourcing guidelines. The brewing giant ABInBev factors sustainability into procurement directives, providing guidance to suppliers on agricultural ingredients through its sustainable agriculture guiding principles. These principles are being integrated into AB InBev’s internal governance routines and procurement processes. Group Danone follows a similar approach. Clearly, there is no one-size fits all approach to integrating sustainability into procurement practices. Each company needs to find a system that works best for it. Regardless of the approach, the first order of priority is to set time-bound measurable goals for sustainable sourcing, and to simultaneously get senior executive buy-in and understanding of the business case for sustainable sourcing. Other important steps include: ensuring that your supplier codes and polices are both strong and linked to sustainable sourcing goals; and implementing structures for training and incentivizing both buyers and suppliers. Making sustainability a standard part of how food companies purchase the ingredients they rely on is an evolving practice. But as our agricultural systems face the new reality of water scarcity and climate change, food companies must hasten to forge the missing link. Eliza Roberts is Senior Manager of Water at Ceres, a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Image source: Picture taken January 20, 2018. REUTERS/Mike Hutchings Read the original blog on TriplePundit
Written by Eliza Roberts Among global food companies, there is a so-called drought of water-aware boards of directors. And for an industry that uses 70 percent of the world’s fresh water, on a warming planet with scarcer resources, that lack of awareness is a concern. Investors are zeroing in on how companies are tackling water and sustainability risks, and increasingly they’re focusing on the board room. In a recent Ernst & Young survey of some 320 investors, more than 75 percent said that mandatory board oversight of sustainability disclosures is “essential” or “very useful” when making decisions about whether or not to invest in a company. Little wonder. Companies that have strong board oversight on sustainability issues, including water, send a signal to investors that they’re serious about these issues. And experts have long asserted that businesses perform better on actual indicators of sustainability when their boards are engaged. Now Ceres has research to back up the strength of this connection. In the recent update of our Feeding Ourselves Thirsty analysis, we found that among the 42 major food & beverage companies that we benchmarked on water risk management, there was a strong link between stronger governance and companies that performed well across the other categories, including operations and supply chain. Campbell Soup Company, for example, is among a small but growing group of companies that increasingly recognize the importance of strong governance when it comes to sustainability. It’s one of four companies, along with Coca-Cola, Diageo and Nestlé, that briefs its board on water-related issues. All four scored among the top 10 in our benchmarking analysis. “Campbell’s CEO and board appreciate the opportunity to understand and assess sustainability performance within the context of core business strategy,” Dave Stangis, Chief Sustainability Officer at Campbell Soup Company told me. “Building that into the governance process drives accountability within the enterprise.” Or consider Molson, the 3rd highest ranking beverage company in our analysis. As a part of the board’s mandate to oversee executive compensation metrics, Molson’s board has identified sustainability as a key indicator to measure executive performance. At Molson, the corporate executive team is rewarded based on a set of metrics measured against the company’s 2020 sustainability targets, including water use. Unfortunately, these companies are the exception rather than the rule. Not enough corporate boards are stepping up. Overall, the food companies we analyzed managed on average to get just 4.5 points out of the 17 we awarded on governance. And a string of major players scored a perfect zero—including Cargill, Archer Daniels Midland, Chiquita Brands and Tyson Foods. The takeaway is clear. On key indicators, ranging from board oversight of water-related issues and links between executive compensation and sustainability goals, the industry is lagging when it comes to governance. For instance, half of the boards we analyzed did not oversee material risks and opportunities related to sustainability and water. And even though we saw an increase in companies starting to link executive compensation to management of water-related issues, 71 percent of businesses didn’t take this critical step. Companies simply cannot afford to keep ignoring water and other sustainability issues like climate change that could materially affect corporate financial performance. For the $5 billion food sector, the combination of climate change and growing threats to water scarcity, including population growth and pollution, is turning water into one of the sector’s biggest financial risks. In 2016, multinational corporations disclosed that they faced $14 billion of water-related risks, a five-fold increase over the previous year. Boards have a fiduciary responsibility to act when risks are material. And that is why more companies need to develop sustainability competent boards. By understanding what climate change or water stress means, why it matters to their business and what their organizations can do, directors can successfully make climate and water risk part of their governance systems. That way, boards will be able to respond to the rising scrutiny among investors. They’ll be able to help prepare their companies for the risks and the opportunities created by water stress, climate change, or forced labor in their supply chains. Lead from the Top, outlines three basic steps companies can take to have a sustainably competent board: integrate knowledge of material sustainability issues into the board nominating process to recruit directors that ask the right questions; educate all directors on material sustainability issues to allow for thoughtful deliberation and strategic decision-making at the board level; and engage regularly with external stakeholders and experts on relevant sustainability issues. Again and again, we’ve seen how strong governance—or lack of it—determines whether companies thrive or stumble when they have to deal with major market challenges. The corruption, deforestation and tainted meat scandals engulfing JBS, the world’s largest meat producer, drive home the importance of good leadership in tackling key challenges and maintaining profitability in the long-term. Food companies need to better prepare for the huge threat that water risks will have on their business. Turning that around will depend in large part on whether boards start waking up to the financial risks that water poses to their business. Read the original blog on Triple Pundit
Written by Brooke Barton, Senior Director Water and Food, Ceres Feeding the world is a mounting challenge for our food system, as climate change impacts collide with burgeoning population growth. And more mouths to feed means demand is rising globally for resource-intensive meat, just as water scarcity and challenges such as deforestation accelerate. But today on World Food Day, I see exciting trends that give me hope. The food sector is beginning to step up. More and more food companies are doing their part to tackle urgent sustainability challenges, while also ensuring our long-term global food security. They – and their shareholders – see both the business imperative and competitive advantage for acting. 1. Cutting Greenhouse Gas Emissions in Agricultural Supply Chains Agriculture produces about a quarter of the world’s greenhouse gas emissions. Fertilizer production, energy use on farms, land clearing for grazing or crops, and methane release from livestock and rice fields all contribute to that big footprint. Food companies have a key role to play at mitigating those impacts, where a sizable chunk of their GHG emissions are produced. Increasingly they are. Food giants like Mars, General Mills, Kellogg, Unilever and Smithfield are setting robust science-based targets to reduce their agricultural supply chain emissions through such strategies as eliminating deforestation practices by suppliers, fertilizer optimization, manure management, methane gas capture and deployment of renewable energies. At the retail end of the supply chain, big players like Walmart are also setting GHG goals, and that’s a key driver for the food companies that supply them to get their own houses in order. Mars pledged to spend $1 billion on an expansion of its sustainability goals, including cutting greenhouse gas emissions across its supply chain by 67 percent by 2050. General Mills pledged to cut absolute GHGs by 28% by 2025 “across the entire value chain.” By 2050 it will slash emissions up to 72%, “in line with scientific consensus.” Kellogg’s 2050 target is to cut its own and supplier emissions by 65% and 50% respectively. Smithfield’s plans to cut its value chain-wide greenhouse gas emissions 25 percentover the next eight years. Their actions are coming none too soon as rising global temperatures are beginning to impact our food supply, with one of the most significant impacts to our water system. 2. Sustainable Sourcing and Traceability Grow Hand in Hand Global food companies are setting time-bound, measurable goals to sustainably source their major commodities, such as wheat, corn, soy and palm oil. Ceres’ benchmarking analysis of 42 food and beverage companies, Feeding Ourselves Thirsty, found that more than half had set goals to source at least two of their major agricultural inputs more sustainably. Even better, six of these companies—Coca Cola, General Mills, Kellogg Company, Nestlé, PepsiCo and Unilever—have set sustainable sourcing goals for a majority of their major agricultural inputs. On a parallel track, commodity supply chains are becoming more traceable—which is an essential ingredient for sustainable sourcing. Supply chain complexity and a lack of data at the farm level can make it difficult for global food companies to ensure that their ingredients are being sourced without environmental or social harm. New tools are emerging, however, to help food companies and their investors gain greater transparency into supply chains. Trase, for example, is an open-access online platform that maps agricultural commodity flows at scale. Trase maps soy and cattle exports from South America and Indonesian palm oil down to the level of producer municipalities and departments. Similarly, University of Minnesota scientists have developed a tool that identifies which U.S. counties use the most water and fertilizer to grow corn, and tracks where that corn ends up, whether in a cow, a corn dog or ethanol in a car. 3. Food companies are helping their growers produce more sustainably Since Ceres first benchmarked food and beverage companies on water risk management in 2015, the number providing some form of direct agronomic support to growers on sustainable farm practices has doubled to more than 70 percent. Perhaps more significantly, twice as many are providing some form of financial incentives to growers to improve farm practices, such as by shifting to more efficient irrigation systems. These efforts are typically targeted and small, yet nonetheless they are a sign of progress. Unilever is a leading example. It partners with farmers on complex sustainable agriculture projects they might not be able to tackle alone. Its soup brand Knorr, for instance, will invest 50 percent of any agreed project budget to enable growers to try out new ideas and speed up the implementation of sustainable agricultural practices. Each year, the company co-invests one million Euros with its suppliers and farmers in training and equipment to accelerate the adoption of sustainable practices. 4. Meat companies are turning to non-meat alternatives Meat, and beef in particular, is heavily resource-intensive, requiring more land and water, and generating more emissions per unit of protein than any other food. In addition, as consumer demand for protein is shifting away from meat in some markets, investors are taking notice, and meat companies are starting to respond. Last year, Cargill sold off its feed lots in the U.S., stating that it wanted to reinvest the money in other sources of protein, like plant-based, fish, and insects as well as other opportunities linked to livestock and poultry. This year it’s making good on that promise with a recent announcement that it was investing in an alternative meat startup, Memphis Meats, which grows meat in tanks by feeding oxygen, sugar, and other nutrients to living animal cells. Cargill is not the first meat company to enter this brave new world. Tyson Foods has taken a five percent ownership stake in Beyond Meat, which produces meat and cheese substitutes from vegetable proteins. Even non-meat food companies are getting into the vegetable-based protein trend through their venture capital. General Mills investment arm partnered with private equity firm 2X Consumer Products Growth Partners to invest in vegan company, D’s Naturals. Our food system faces urgent and daunting challenges, but these trends show that food companies are beginning to take meaningful measures to reduce their impacts. Ceres will continue to drive change in the food industry through our Investor Initiative for Sustainable Forests, our research efforts, including the online resource Engage the Chain, our stakeholder engagements and the AgWater Challenge.
By Eliza Roberts Manager, Water at Ceres Preliminary estimates for the costs of Hurricanes Harvey, Irma and Maria are in the hundreds of billions of dollars range—from disruption of business, to infrastructure and property damage, to crop losses. Each of the deadly storms hit agriculture especially hard, from cattle and soy in Texas, to citrus and sugar in Florida, to bananas and coffee in Puerto Rico. Puerto Rico lost a staggering 80 percent of its crop value, according to its secretary of Agriculture, Carlos Flores Ortega. Cattle stand stranded in flood waters outside of Houston after Hurricane Harvey, Conroe Texas, August 29, 2017. (U.S. Army Reserve photo by Capt. Loyal Auterson) (Released) Climate change didn’t cause the monstrous hurricanes, but a warming earth fueled their sheer destructive force. The food sector, which consumes 70 percent of our planet’s freshwater, is especially vulnerable to such extreme weather patterns that are the most visible and devastating hallmarks of climate change. Already, erratic precipitation and hotter temperatures are impacting crop yields and productivity. With climate models predicting worse to come, food companies must better manage precious freshwater resources, and simultaneously shore up their resiliency against the impacts of an ever intensifying water cycle, from drought to altered rainfall patterns to flooding from turbo-charged storms. Already, water risks in food production are escalating around the world: One-third of the world’s largest aquifers—mostly nonrenewable groundwater supplies used to feed crops—are being rapidly depleted in Saudi Arabia, India, Pakistan, northern Africa and California’s Central Valley. In India—where 90 percent of freshwater goes to feed crops—farmers have taken to the streets in violent protest over the government’s failure to solve the agrarian crisis in the face of prolonged drought; thousands of others have taken their own lives. Wheat production in the U.S. is down 9 percent this year, and the 2017 drought in southern Europe is reducing cereal production in Italy and parts of Spain to its lowest level in at least 20 years. The meat industry, which consumes an enormous volume of water, is also responsible for huge wastewater and related pollution that result from animal slaughtering and processing. When manure is not disposed of properly, it can cause major toxic algae blooms. A Lake Erie bloom in 2014 left a half million people without drinking water. This year’s bloom is harming the regional economy. Population growth adds further pressure. Water demands are expected to increase by 55 percent and food demands by 60 percent by 2050 when population will exceed nine billion. People everywhere will be eating more meat, fruits, vegetables and processed foods—all of which will put added pressure on the earth’s strained resources. The implications for businesses that rely on agricultural crops are profound. A recent analysis by the investment research firm MSCI found that $459.2 billion in revenue is at risk for food companies from increasingly widespread water shortages for irrigation or animal consumption, and $198.2 billion is at risk from changing precipitation patterns. Fortunately, not all food sector companies are failing to address the link between water, climate and their bottom line. Feeding Ourselves Thirsty, a benchmarking analysis by Ceres that scores the world’s largest food companies on their response to water risk, found that some corporate leaders are making progress—especially Coca-Cola, General Mills, Nestle, PepsiCo and Unilever—but the majority must do more to water-proof their businesses and protect and sustain water supplies. Here are a few examples of what companies are doing right: PepsiCo committed to work with its agricultural suppliers to improve the water-use efficiency of its direct agricultural supply chain by 15 percent by 2025 in high water risk sourcing areas. General Mills has set time-bound sustainable sourcing goals for each of its 10 major commodities sourced and clearly defines and measures progress against each goal using a dashboard on its website to track progress overall. Campbell’s uses a Supplier Sustainability Scorecard to capture environmental performance metrics, including water management, from 60 suppliers representing 80 percent of procurement spend. The data is used to benchmark suppliers, identify opportunities for engagement and evaluate future supplier relationships. Unilever co-invests one million Euros annually in training and equipment for its suppliers to accelerate the adoption of sustainable farming practices. Even with these strong performers, however, the average score for the 42 companies evaluated in Feeding Ourselves Thirsty is only 31 out of 100 points. The meat and agricultural product industries in particular continue to lag woefully behind, demonstrating little investment in mitigating water-related risks, even though they have the highest exposure to them. Starting today, the food sector must put into place water-smart plans to prepare for the inevitable. Companies need to assess their supply chains and determine how they can prepare for water risks in the age of climate change, set time-bound measurable goals for improvement, equip farmers, and invest in water conservation technology. And they must simultaneously cut their greenhouse gas emissions across their supply chains and operations. Agriculture’s large carbon footprint is a key contributor to the very erratic weather that’s driving financial risk in the food sector and threatening global food security. Let this season’s monstrous hurricanes serve as a wake up call. Food companies must make water management a business imperative like never before. Read the original blog on National Geographic
Written by Mindy S. Lubber, President and CEO of Ceres Climate change didn't cause the recent monstrous hurricanes, but a warming earth certainly fueled their fury. The food sector, which consumes 70% of our planet's fresh water, is especially vulnerable to extreme weather patterns that are the most visible and devastating hallmarks of climate change. Already, erratic precipitation and hotter temperatures are affecting crop yields and productivity. Climate models predict worse to come. Diminishing snowpack in many regions will dry up seasonal water supplies that sustain major growing areas such as the western U.S., India and Peru. Crops will suffer more stress as evaporation reduces the amount of water they can soak up through the soil. And farmers will contend with increased weed growth, disease outbreaks and pest infestations — all of which reduce yield and drive up food prices. Population growth adds to the pressure. According to the United Nations, by 2050, to meet the needs of a projected population of 9.1 billion, water demands are expected to increase by 55% and food demands by 60%. Investors must act to cut their exposure to water risk, but it time is dwindling rapidly. Financial fallout The financial fallout of growing water risk is evident. In headlines and on earnings calls, major industry players — including Nestle SA, The Coca-Cola Co. and Diageo PLC — are disclosing material financial impacts linked to water challenges, including scarcity-driven tariff hikes, agricultural supply chain disruptions and lost growth opportunities in water-stressed markets. Pioneer Foods Group, for example, a South African packaged goods company, reported a 47% drop in 2017 midyear earnings resulting largely from a regional drought — especially shortfalls in raisin crops and high grain prices. More than 90 food-sector companies flagged water risk in their earnings calls so far this year, as well they should. Financial risks associated with water withdrawals and wastewater are highly material to the food sector, according to an analysis by the Sustainability Accounting Standards Board. The implications for businesses that rely on agricultural inputs are profound. A recent analysis by MSCI Inc. found $459.2 billion in revenue is at risk for food companies from increasingly widespread water shortages for irrigation or animal consumption, and $198.2 billion is at risk from changing precipitation patterns. But many food companies are unprepared for climate change's profound impact on the water resources that sustain their operations and agricultural supply chains. Feeding Ourselves Thirsty, a new benchmarking analysis by Ceres that scores the world's largest food companies on their response to water risk, found that while some corporate leaders are making progress — especially Coca-Cola, General Mills Inc., Nestle, PepsiCo Inc. and Unilever — the majority must do more to water-proof their businesses and protect and sustain water supplies. Even with these strong performers, the average score for the 42 companies evaluated is only 31 out of 100 points, based on their water management through governance and strategy, and in their direct operations, manufacturing and agricultural supply chains. The meat and agricultural product industries in particular continue to lag, demonstrating little investment in mitigating water-related risks, even though they have the highest exposure to them. What investors can do What can investors do to minimize their exposure to water risks in the food sector? First, money managers should review their institution's proxy-voting guidelines and policies to ensure support for relevant shareholder resolutions on water risk, while asset owners should ensure their fund managers act on those guidelines. Second, investors can support efforts to increase and standardize disclosure on food-sector water risk, whether by engaging directly with portfolio companies, joining investor collaborations such as Ceres Investor Water Hub or supporting market-level disclosure platforms such as SASB, the Global Reporting Initiative and the water questionnaire of CDP (formerly the Carbon Disclosure Project) among others. Third, investors can directly engage with poorly performing companies on performance improvement. Let this season's hurricanes serve as a wake-up call. The food sector must put into place water-smart plans to prepare for the inevitable. Starting today, companies need to assess their supply chains and determine how they can prepare for water risks in the age of climate change, set time-bound measurable goals for improvement, equip farmers and invest in water conservation technology. To protect their bottom lines and shareholder value, food companies must make water management a business imperative like never before. Mindy Lubber is CEO and president of Ceres, Boston, This article represents the views of the author. It was submitted and edited under Pensions & Investments guidelines, but is not a product of P&I's editorial team Read the original blog on Pensions and Investments Online