Top Food and Beverage Companies: Leaders in Sustainability

Sustainability Scores 2010

Sustainability scores for the largest food and beverage companies

Company/Tomorrow's Value Score
Unilever/64
Nestle/59
Danone/58
PepsiCo/51
Coca-Cola/49
Anheuser-Busch InBev/46
Kraft/46
Heineken/39
Tyson/28
Kirin Holdings/23

Source: Two Tomorrows, October 2010

Caring for the environment is no longer just the right thing to do; it's essential that food and beverage companies commit to a long-term strategy of sustainable business practices. From internal operations and packaging, backwards to your supply chain and forward to your consumer marketing and public relations efforts, sustainability is a huge and complex but essential subject.

In this global and transparent economy, governments legislate and regulate sustainable practices, consumers increasingly demand it and watchdog organizations vigorously monitor and challenge corporate behavior on this front.

Defining sustainability is difficult. It means different things to different companies. In the story that follows this one, our annual Green Plant of the Year feature, ConAgra defines it as much in terms of maintaining the company and jobs in the community as in saving the Earth. And that's an increasingly common definition.

"Acting sustainably means maintaining a balance and not depleting your available resources," according to Brad Scott, senior director of Landor Associates, a brand consulting business. "In business this often translates into balancing costs against a product's impact on the community in which you operate. Some refer to this as the triple bottom line – profit, people and the planet."

So for this story, we've looked at how sustainability is defined by two of the world's biggest food and consumer products companies – Unilever and Nestle – who are universally regarded as leaders in sustainability. We also look at how smaller companies -- Naked Juice and Sunny Delight -- are doing their part to save the Earth.

Unilever's double/half challenge

Two Tomorrows Group Ltd., a UK-based international corporate sustainability agency, conducts an annual assessment of corporate sustainability practices of the world's largest food & beverage companies, following the Fortune Global 500 list, which ranks the world's largest companies by revenue. It ranked Unilever as the top sustainable food & beverage company in its most recent list, which was based on 2010 research.

In 2010, sustainability efforts were driven by consumers' social and environmental concerns as well as companies' fears that climate change and water scarcity put the security of supplies at risk, according to Two Tomorrows.

Potential customers in emerging markets was another strong incentive to develop new products and distribution models that work in challenging socio-economic circumstances and address special nutritional needs, according to the rating agency. While leaders such as Unilever, Nestlé and Danone demonstrated strong initiatives across these areas, all companies in the sector faced significant challenges, particularly within their supply chains.

Unilever, which topped the list, has a comprehensive sustainability strategy based on stakeholder feedback, governed by the company's senior leaders and underpinned by solid management systems. Its performance on important variables such as carbon emissions and water usage has shown marked improvements over the years. It has also shown leadership by co-founding initiatives such as the Marine Stewardship Council and the Roundtable on Sustainable Palm Oil. It was an early supporter of fair trade and started rolling out nutritional labeling practices earlier than most.

Last year, CEO Paul Polman unveiled Unilever's Sustainable Living Plan, which seeks to halve the company's environmental footprint by 2020 while expecting to double sales.

Major goals of this aspirational, albeit challenging, initiative involve greenhouse gas (GHG), water, waste and sustainable sourcing. Specific goals are:

• Reduce GHG emissions by 15 percent by 2012, and reduce carbon emissions to at or below 2008 levels by 2020, a 63 percent reduction per ton of production and a 43 percent absolute reduction.
• Reduce water use by its factories to at or below 2008 levels, a 78 percent reduction per ton of production and a 65 percent absolute reduction.
• Reduce packaging weight by a third by 2020, increase recycling and recovery rates on average by five percent by 2015, and 15 percent by 2020 in all its top 14 countrie. Also key is to increase recycled material content in packaging to maximum possible levels by 2020, and reduce total waste sent for disposal to at or below 2008 levels, an 80 percent reduction per ton of production and a 70 percent absolute reduction. In addition, Unilever plans to eliminate PVC from all its packaging by 2012. 
• Source 100 percent of agricultural raw materials sustainably by 2020 – but ease into the goal with a 30 percent reduction by 2012 and a 50 percent reduction by 2015. To achieve the goal, Unilever will first focus on its top 10 agricultural raw material groups: palm oil, paper and board, soy, tea, fruits and vegetables, cocoa, sugar, sunflower oil, rapeseed oil and dairy. And the company plans to move to 100 percent cage-free eggs for all its products.

Unilever suggests to suppliers its 16-page booket, "Responsible and Sustainable Sourcing: Standards Guide for Our Supply Partners. " "We have an important message we want to share with valued suppliers around the world," Polman writes in his introduction to the booklet. "Our suppliers must play a critical role in helping to deliver this ambition, to help us buy responsibly and enable us to source sustainably."

To that end, Unilever urges its suppliers to join non-for-profit Supplier Ethical Data Exchange (Sedex) as a way of sharing sustainability data, such as audits and self assessments. This allows information and best practice to be shared while reducing the compliance overheads of suppliers. And the company is also keen on collaboration. "While Sedex helps us to understand our supply base, it is incomplete without the engagement and training of both our procurement teams and our suppliers. We are inviting suppliers to attend workshops to increase involvement, understanding and ultimately compliance with our standards."