In addition to protecting the environment; sustainability is often defined as meeting the needs of today without compromising the ability of future generations to meet their own. The triple bottom line – planet, profit and people – involves working to preserve the environment while keeping the organisation financially stable.
93% of the world’s 250 biggest companies now report on sustainability; and it is now a mandatory requirement for listed UK companies that have more than 500 employees to report on their sustainability objectives and performance against targets. Some global fast-moving-consumer-goods (FMCG) companies that are regarded as leaders in sustainable supply chain management include: Coca Cola, Nestle, L’Óreal, Proctor and Gamble, Unilever, and Nike.
The influence of the consumer Consumers are increasingly expecting their products to be made and distributed ethically without negatively impacting the environment. They want to see consumer-facing-companies exhibit sustainable practices in their businesses like concerning themselves with human rights, limiting their carbon emissions and reducing their use of non-renewable energy and water. They want to limit their carbon footprint by buying local produce. The UK government recently published guidance that stated that it would maintain its current set of standards on food safety, food labelling and food quality, despite Brexit.
The Coca-Cola Company
Coca-Cola aims to grow its global juice business significantly by 2020 so sustainably sourcing fruit for its juice products becomes increasingly important. Farm suppliers have certain standards to meet. The company estimates it will have reached 54 per cent of its goal to sustainably source its lemon by 2020. Moving towards sustainability Sustainability is not just about going “green”. It is a holistic approach that considers environmental, social and economic factors together when entering into any business relationship. Leading companies are identified as those that regard sustainability as part of the company culture and its DNA. The L’Óreal Group
By 2020, 100% of L’Oréal’s strategic suppliers will participate in its sustainability programme. The Group has developed a two-pronged approach. It selects suppliers on the basis of their environmental and social performance and provides them with training tools. L’Oréal is recognised as a leading company in fighting climate change and transforming towards adopting a model low-carbon enterprise.
Packaging
Consumers are increasingly becoming environmentally aware of unnecessary packaging and especially the disposal of single-use plastics. The FMCG sector is highly competitive so there is a major drive to reduce costs whilst still considering the environmental and social impacts. Swedish companies lead the way Furniture company Ikea has invested in forests in Romania and the Baltics, wind farms in Poland and now it is investing in a plastic recycling plant in the Netherlands. Its aim is to become more sustainable by avoiding environmentally damaging activities like illegal deforestation and plastic waste. Packaging manufacturer, Tetra Pak, requires third-party verification that its paperboard suppliers do not use wood from any form of deforestation that breaks the natural forestry cycle. A company cannot supply Tetra Pak if it fails to meet these requirements.
Making your supply chain more sustainable
McKinsey believes that three approaches can help consumer companies make their supply chains more sustainable:
• identifying critical sustainability issues across the whole supply chain and addressing them
• linking the company’s supply chain sustainability goals to the global sustainability agenda i.e. the UN Sustainable Development Goals 2030.
• helping their suppliers to manage their environmental and social impact which in turn provides a basis for strong growth.
Nestle
Nestle’s annual purchases of cocoa are in excess of 300 000 tonnes. The company only uses sustainably sourced cocoa from suppliers accredited by independent third parties to make its KitKat bars. Nestle’s Cocoa Plan operates across three key pillars: better farming practices, better lives of employees and their communities and betterquality cocoa.
Supply chain consultancies are providing expertise to companies to help them understand the benefits of sustainable practices. FMCG Companies that are most sustainably aware may be the earliest to gain from the growth in consumer spending that is expected to take place over the next decade.
SCCG
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