2012 - CSR spotlight moves to water, supply chains
By Ben Cooper | 3 February 2012
The water usage of manufacturers and retailers will be under increasing scrutiny
Looking at how prevalent sustainability issues have become in recent years, forecasting that sustainability will be a prominent subject in 2012 is hardly the boldest of predictions.
But given the complexity and breadth of the sustainability arena, predicting what the hotspots will be during the coming 12 months is an altogether different proposition. There are some racing certainties, however.
With regard to environmental sustainability, we can expect the continuation and intensification of two key trends seen in recent years: the increasing focus on water consumption and efficiency, and the attention being paid to supply chains.
As the impetus for raising the profile of environmental sustainability within companies stemmed chiefly from concern over climate change, it was natural that at the outset energy consumption and efficiency were the primary focus.
While close attention continues to be paid to energy, latterly water has become an increasingly dominant issue. This trend will continue in 2012 but more specifically companies are under increasing pressure to address and report on water consumption and efficiency in water-stressed areas. Unlike for carbon, global figures on water efficiency are of questionable value.
The pace-setters in the evaluation and reporting of environmental impacts are already differentiating between water-stressed and non-water-stressed regions, and those companies not moving towards region-specific reporting on water increasingly risk being viewed as laggards.
Not least, water usage is central to the sustainability work food companies direct towards their supply chains. Clearly, supply chain issues have been viewed as significant for many years but more recently the leading companies in corporate sustainability have sought to go beyond the project-based work, training and best practice initiatives with their suppliers to the comprehensive mapping of environmental impacts back along supply chains.
The measurement and reporting of impacts in supply chains is increasingly seen as critical and companies will be seen as delinquent in their responsibilities if they are not making moves to satisfy these requirements.
The water, energy and food security nexus
Both the water and supply chain trends feed into one definitively critical issue for the food industry, which differentiates it from other consumer goods sectors, namely food security. For food companies specifically, food security is an issue of mounting significance and this will only increase further in 2012.
This will be underlined in the coming year as we hear increasingly wider discussion of the 'water, energy and food security nexus', which emphasises the inter-relation of water, energy and food security. This is rapidly becoming a key frame of reference for policymakers and companies and will be an increasingly discussed topic during 2012, particularly in the lead-up to the United Nations Conference on Sustainable Development in Rio de Janeiro in June.
European Food Sustainable Consumption and Production Round Table
This year could also be a critical one for the European Food Sustainable Consumption and Production Round Table (Food SCP RT).
In February, the Food SCP RT is scheduled to publish a report based on the work of its 'Continuous Environmental Improvement' working group, which is one of the initiative’s key 'deliverables'.
More crucially, particularly given the tenor of remarks made to just-food by a European Commission representative late last year, the European Food SCP RT is under pressure this year to demonstrate both its capacity to represent the views of a wide range of stakeholders and deliver action. The current mandate for the Food SCP RT expires at the end of this year when the European Commission will evaluate its participation in the project.
Multi-stakeholder initiatives, such as the Roundtable on Sustainable Palm Oil and more recently the Round Table on Responsible Soy, have a key role to play in fostering change, particularly in challenging supply chains such as soy, palm oil and cocoa. While these initiatives have always drawn a degree of scepticism and criticism from some NGOs, the level of criticism has arguably increased in recent years, suggesting the coming year could be a crucial one for multi-stakeholder dialogue and collaboration.
Reaching for the high boughs
By the admission of many companies, some of the initial achievements in reducing environmental impacts were what could be termed 'low-hanging fruit'. Energy savings in production plants, the more efficient use of logistics, for example, are simple business efficiency and cost reduction measures, which can and are reported as sustainability achievements but which may have been carried out in any event for eminently pragmatic reasons.
As companies move more deeply into their supply chains and seek greater impact reduction across the board, the challenges become tougher and the need for significant long-term investment increases. In other words, the true commitment of companies to the sustainability agenda - and not merely to business efficiency - will be increasingly tested.
All this comes at an interesting economic juncture. Champions of corporate sustainability strategies will suggest that the fact that three years of the toughest economic conditions have failed to interrupt the ascent of sustainability up the corporate agenda underlines how embedded it now is in companies' business models.
However, the jury may still be out. The degree to which that energy, commitment and drive was renewed and refreshed during the dark days, when short-term concerns were perhaps understandably predominant, will only become evident in 2012, 2013 and beyond.
Most crucially, the degree to which the rigours of the past three years have impaired companies' ability or preparedness to go to that next level, as epitomised by the greater focus on supply chains and on water-stressed locations, may become more apparent during the course of the coming year.
This year could see a significant development in the debate over the use of child labour in the cultivation of cocoa. Nestle's move to partner with the Fair Labor Association (FLA) in the investigation of the use of child labour in its cocoa supply chains, and the undertaking by both parties that the FLA's findings in March will be made public, may lead to the first public acknowledgement by one of the major players in the chocolate market that child labour exists in its own supply chain. To date, companies have only conceded that child labour exists in supply chains generally and is a problem for the entire industry.
The coming year is also likely to see continuing debate over how food companies help to foster or militate against the promotion of better dietary health.
As moves in the US towards the introduction of official government guidelines on child-directed marketing have now effectively been sidelined in favour of revamped industry self-regulatory measures, attention will now turn to front-of-pack (FOP) nutritional labelling.
Towards the end of last year, the Institute of Medicine (IOM) published the second of two reports into FOP nutritional labelling commissioned by the Food and Drug Administration (FDA). The latest report urges the FDA to develop a "single, standard front-of-pack symbol system" which would feature on all food and drink products.
As with children’s advertising, the US food industry has revamped its own efforts in the face of possible legislative intervention. The industry’s original FOP scheme, Smart Choices, was so heavily criticised by the FDA in 2009 that food companies disbanded it. As we await the FDA's response to the IOM report, the food industry is preparing to launch its new FOP labelling scheme, Facts Up Front, early in 2012.
Even though President Obama raised the profile of food legislation in the US by his extensive overhaul of food safety laws and by making tackling childhood obesity a major priority, food policy is rarely a prominent issue in elections and the 2012 Presidential race is unlikely to be an exception. However, the launch of Facts Up Front coinciding with deliberations by the FDA on its next course of action is likely to result in significant public debate on the issue, and given the President’s and the First Lady’s hands-on engagement on the obesity issue, the administration could see itself drawn into that debate.
Interestingly, the development of a single, uniform FOP nutritional labelling system is also on the agenda in Australia, where there is also mounting pressure for the introduction of a supermarket ombudsman. Campaigners in the UK may counsel their Australian counterparts to have patience given the length of time it has taken to make progress towards the introduction of an adjudicator in the UK. In spite of being in the manifestos of all the major parties, moves to introduce an ombudsman in the UK appear to have stalled, with the Government being accused of dragging its feet and yielding to pressure from the major supermarket chains who oppose the move.
The issue is likely to resurface again in the coming months, as is continued controversy over the UK government's Public Health Responsibility Deal, which campaigners suggest gives food companies undue influence over policy in return for modest voluntary undertakings. The less than rapturous welcome given to Supermeals, the Department of Health's first dietary initiative of 2012, only served to underline the level of scepticism the Public Health Responsibility Deal has engendered.
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2012 - CSR spotlight moves to water, supply chains