While the Agricultural Products industry demonstrated the most improvement since the 2017 analysis, it remains the second-lowest performing industry, with an average score of 30 out of 100. Companies in this industry are primarily involved in the production, sourcing, and processing of cereal grains such as corn, wheat and soy, as well as a range of water-intensive fruits, nuts and vegetables.
Only a selection of indicators are represented. See the scoring guidance here.
Areas of Strength
Board oversight over water risks
Each public company in the industry has established some level of board oversight over sustainability, while the boards of Archer Daniels Midland, Bunge and Olam are regularly briefed on water risks and strategy.
Risk assessments of the agricultural supply chain
The industry appears to be taking water risk more seriously, with all seven companies improving their scores since 2017. Six out of seven companies have assessed risks to direct operations, while every company except Chiquita Brands and Fresh Del Monte has broadened its analysis to include supply chain risks. Ingredion uses multiple third-party tools to identify crops and growing regions facing a variety of water- and climate-related risks. This analysis helps the company prioritize which growers to include in its sustainable-sourcing programs. Once these growers are identified, the company uses the Sustainable Agriculture Initiative's Farm Sustainability Assessment to understand their most critical water challenges. Ingredion also integrates several of the IPCC’s warming scenarios into its agricultural sourcing strategy.
Areas for Improvement
Sustainable sourcing goals
While five of these seven companies have set goals to source at least one of their commodities more sustainably, all could set goals for higher proportions of their commodities, and more clearly link their goals to specific metrics and definitions of sustainable sourcing.
Financial support to growers
While six of these companies provide some form of educational or agronomic support to growers, only three (Archer Daniels Midland, Bunge, Olam) disclose forms of direct financial support to them.
Linking sustainability and executive compensation
Only Archer Daniels Midland discloses linking executive compensation to water-related performance. Several members of its executive management team have their compensation determined in part by the firm’s performance on metrics including water efficiency, reduction of water withdrawals and water-related community projects.
|Board oversight over water risk management|
|0 points||Public disclosures do not describe formal board oversight of sustainability or water risks.|
|1 point||Board or board committee has oversight over “sustainability,” “environment,” “corporate social responsibility” or other related terms, but not water specifically.|
|3 points||Board is regularly briefed by management on water risks.|
|6 points||Board is regularly briefed by management on water risks and oversight over water risks is explicitly codified in board committee charter.|
|Ties compensation of senior executives to water targets & strategy|
|0 points||Public disclosures do not identify any relationship between water or sustainability performance and the compensation of senior executives.|
|3 points||Water is tied to executive compensation implicitly (e.g., through a sustainability or climate target).|
|6 points||Water is tied to executive compensation explicitly.|
|Assesses water risks in direct operations|
|0 points||Public disclosures do not describe a process by which the company identifies whether its owned operations are in high-risk watersheds.|
|2 points||Company uses third-party tools or data sets (or equivalent internal tools) to identify facilities located in watersheds identified as water-stressed (inclusive of water scarcity & quality).|
|4 points||Analysis identifies facilities in watersheds facing a broader set of risk factors such as impaired ecosystems, greater regulatory scrutiny or limited local access to water.|
|Assesses water risks in agricultural supply chain|
|0 points||Public disclosures do not describe a process by which the company identifies whether its agricultural inputs are sourced from high-risk watersheds.|
|2 points||Company uses third-party tools or data sets (or equivalent internal tools) to identify agricultural inputs or sourcing regions in high-risk watersheds (accounting for water scarcity and water quality).|
|5 points||Analysis identifies inputs and sourcing in watersheds facing a broader set of risk factors such as impaired ecosystems, greater regulatory scrutiny or limited local access to water.|
|Has time-bound sustainable-sourcing goals for key commodities|
|Goals were assessed against the following criteria: Impact orientation, quantification, commodity breadth and commodity depth (see detailed criteria here).|
|Provides financial incentives to farmers to adopt agricultural practices to reduce water impacts|
|0 points||Public disclosures do not describe any provision or financial incentives to encourage more sustainable production.|
|2 points||Provides direct financial incentives to producers to encourage adoption of practices that reduce impacts and dependence on water for some agricultural suppliers.|
|4 points||Provides direct financial incentives to producers to encourage adoption of practices that reduce impacts and dependence on water for at least 50% of agricultural suppliers.|