Sustainability Watch - Timothy Venverloh, Archer Daniels Midland
Venverloh believes there will be "consolidation" in sustainability certification systems
As one of the largest traders of agricultural raw materials in the world, Archer Daniels Midland is probably a direct or indirect link in more food supply chains than it is possible to quantify. Global sustainability director Timothy Venverloh explains how ADM is setting about making its business and those of the companies it supplies more sustainable.
As sustainability has risen up the corporate agenda of food manufacturers, those companies supplying them have had to respond. This is not to say large-scale suppliers such as Archer Daniels Midland would not be on a sustainability journey of their own but listening and responding to customers' needs has to be at the heart of what any successful company does.
As Timothy Venverloh, ADM's global sustainability director, points out: "We supply some of the largest multinational, consumer-facing companies in the world, and sustainability is important to all of them."
That Venverloh should use the term "consumer-facing" is interesting. It is often a criticism of commodity suppliers that they are rather anonymous in terms of public profile and, lacking the same degree of consumer pressure on sustainability issues as the branded companies they supply, move more slowly.
Venverloh rejects this notion. "The fact is any issue our customers face is also an ADM issue. So, for instance, if our customers are making commitments based on consumer demands or government policies or both to use only sustainable palm oil in their products, it becomes our responsibility to help them meet that commitment on time. Just as consumers demand accountability from the brands they know and trust, our customers demand accountability from ADM. We really are in exactly the same boat."
Last month, ADM published its latest corporate responsibility report, which Venverloh believes demonstrates how the company is successfully integrating sustainability into its business.
"I think we're doing a good job of integrating sustainability into our culture, and accelerating progress," he says. "We've set clear goals, we've mobilised the organisation in support of those goals and we're implementing the technologies and processes needed to track our results. In my view, a well-run sustainability programme considers impacts to the environment, operating communities and business performance; it has to incorporate all three elements. And that's what we're working to create."
In 2011, ADM set targets to reduce energy, emissions and waste output per unit of production by 15% by 2020, having already set a 15% goal for water intensity, and reports good progress against three of these targets.
By the end of 2012, it said it had achieved a 4.3% intensity improvement in energy, a 2.6% intensity improvement in emissions and an 11.8% improvement in water intensity. "We're proud of this success early in our plan," Venverloh says. "We have more work to do to reach our waste-reduction goal, but overall I'm pleased with our early progress." The company expects to achieve its water target by 2018.
Another "critical" development in Venverloh's view has been the launch of ADM's environmental policy, which was officially unveiled in April.
Among other measures, the policy commits ADM to establish programmes and practices intended to ensure operations are conducted in an "environmentally sound manner". ADM pledged to commit the necessary employee and management resources to support and implement the programmes. It also said it would perform periodic evaluations to ensure the programmes are working effectively, communicate and reinforce accountability for environmental stewardship throughout the company and provide training to help employees understand their environmental responsibilities.
"I believe it is critical in the sense that it provides a common direction, framework and philosophy for company operators," Venverloh tells just-food. "For a global company operating in more than 75 countries, with 30,000 employees, this kind of consistency is essential."
The company's environmental strategy aims to fulfil what ADM sees as its own responsibilities on sustainability but these aims and aspirations are informed by what its customers are demanding, both with regard to product innovation and information.
"Innovation is vitally important to ADM and to a sustainable future, which is why we dedicate a section to the topic in our 2013 report," says Venverloh. "Innovation is in our DNA, and we'll continue looking for ways to meet customers' demand for sustainable solutions."
In addition, he continues, as companies seek to quantify environmental impacts further up their supply chains, ADM's customers "are asking for different kinds of information related to sustainability, and they are also asking ADM to participate in a variety of global supply chain programmes".
As examples, he cites ADM's participation in the Supplier Ethical Data Exchange (SEDEX) and its "active membership" of the Round Table on Responsible Soy (RTRS), the Roundtable on Sustainable Palm Oil (RSPO) and the International Sustainability of Carbon Certification (ISCC).
However, he adds: "The greatest challenge that we, like many industries, are facing is competition between the various supply-chain certification systems." The situation is "further complicated" when companies develop and implement their own sustainability criteria.
"It's sometimes a bit of a juggling act for us to participate in the development of these certification systems, educate growers and customers on the pros and cons of each, act as administrator of these systems in some cases, and manage the unique requirements and expectations of our customers - all while providing quality products at a competitive price." Some consolidation is required, Venverloh believes. "We're optimistic that the various certification systems ultimately will be consolidated and integrated into a universally recognised few."
Participation in such schemes is virtually a prerequisite for a company operating in areas such as soy, cocoa and palm oil if they are to retain a position as a legitimate stakeholder in the contentious debates surrounding the sustainability of these sectors.
Collaboration with NGOs and development agencies can also be "quite constructive", says Venverloh, "when both parties share common goals and priorities". Venverloh cites ADM's partnership with the Brazilian NGO, Aliança da Terra, as one of its "most notable" collaborations.
He also points to a partnership in Maharashtra in India, aimed at helping sunflower growers increase yields, and another which has funded bridge and well construction in cocoa farming communities in Côte d'Ivoire. "Our NGO partners have helped ADM make a greater positive impact, and we're grateful for the opportunity to continue working with them."
Interestingly, ADM is said to be pondering the sale of its cocoa business to Cargill. Asked if the sustainability challenges associated with the cocoa supply chain had influenced its decision to consider selling up, Venverloh only says: "ADM has been a leader in cocoa sustainability for more than a decade, and we believe our involvement in the global cocoa supply chain has had a positive impact on the cocoa supply chain as a whole."
Meanwhile, an acquisition ADM is looking to complete in Australia may also have a bearing on its sustainability credentials. As ADM seeks to close its purchase of GrainCorp in Australia, opponents of the deal have questioned the company's commitment to pay Australian farmers sustainable prices. Venverloh stands by the company's record of investment in the agricultural communities it works with. "We believe in an increasingly productive future for Australian agriculture, and we have a long history of investing in the businesses and communities in which we operate," he says.
The debate over GrainCorp only serves to underline the delicate position a major purchaser of agricultural commodities can hold when seeking to strike a balance between maximising returns and dealing fairly with suppliers, where commercial decisions can have such huge impacts on entire communities. With that in mind, it is little wonder its sustainability strategy has become such a critical aspect of ADM's business.
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