Overview

The Packaged Food industry remained the highest performer with an average score of 47 out of 100. While the Packaged Food industry includes many leaders, there is a significant range in performance, from a high of 87 to a low of 14. 

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Only a selection of indicators are represented. See the scoring guidance here.

 

Areas of Strength

Water use reduction targets

17 of the 18 companies have water use or efficiency targets for their operations, while five have set risk-differentiated or context-based water targets.

Mars Inc. has set context-based goals to ensure that water use along its value chain is within annually renewable levels depending on the watershed. The company aims to halve the gap between its 2015 water use and sustainable water use by 2025. Mars set more ambitious water intensity targets for facilities in water-scarce regions, and will require 20 of its factories within the highest water-risk regions to complete water stewardship reviews in accordance with the Alliance for Water Stewardship.

In addition to its goal to reduce its overall water use 25% by 2025, PepsiCo aims to increase water use efficiency 15% by 2025 within its high water-risk agricultural sourcing regions. The company also has commodity-specific water efficiency goals for corn, potatoes, palm oil, sugar and wheat.

Risk assessments

All 18 companies in the industry assess water risks to their direct operations, while all but four do so for their agricultural supply chains. Many consider risks beyond water scarcity and pollution.

General Mills analyzed its water risk exposure across 41 watersheds, accounting for 15 ingredients in 36 sourcing regions. The assessment used several tools, including the WWF-DEG Water Risk Filter, WBCSD’s Global Water Tool and irrigation intensity data from the University of Minnesota Institute on the Environment. The analysis accounted for challenges ranging from stakeholder conflict to regulatory risk.

Unilever conducts annual water risk assessments that incorporate data gathered from over 10,000 growers on water management, use of surface and groundwater, water rights and permits, and water quality.

 

Areas for Improvement 

Sustainable sourcing goals

While only four Packaged Food companies fail to set any sustainable-sourcing goals, most of the existing goals are vaguely defined and fail to address significant portions of key agricultural commodities. See examples of strong sustainable-sourcing goals here.

Educational and financial support for growers

While many Packaged Food companies provide some form of educational support to growers, the scale of these efforts is still limited. Only four companies share insights from aggregated, anonymized data to help inform decisions at the field level and encourage adoption of sustainable agriculture practices. 

Kellogg’s requires suppliers of its top 10 priority ingredients to report on water use and water risk management through the Kellogg Grower Survey. The company also asks suppliers that make up 75% of its supplier spending to respond to the CDP supply chain questionnaire. Kellogg’s also collects data on the sustainable agriculture practices of its corn growers through the Fieldprint platform. Kellogg’s then aggregates and anonymizes this data and shares relevant insights with its growers.

Campbell’s provides its tomato growers with report cards, benchmarking its performance on sustainability metrics against its peers.

The majority of Packaged Food companies do not provide financial assistance to farmers to promote more sustainable methods of crop production. This assistance can take the form of premiums, extended contracts or low-or-no-interest loans to growers.

Mars Inc. pays a premium to rice farmers who adhere to the company’s sustainable-sourcing guidelines.

Archer Daniels Midland, Cargill, PepsiCo and Unilever facilitate cost-share programs that award premiums to Iowa corn and soy farmers who grow cover crops, which improve soil health and reduce runoff.


Scoring Guidance for Selected Indicators

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.