Transcript Nancy Himmelfarb NJH Sustainability Consulting himmelfarb.com

Sustainable Procurement:
It Matters!
Nancy Himmelfarb
NJH Sustainability Consulting
himmelfarb.com
May 19, 2015
Sustainability Pressures in Food Industry
TRANSPARENCY
2
© 2015 NJH Sustainability Consulting
Sustainability Pressures in Other Industries
TRANSPARENCY
3
© 2015 NJH Sustainability Consulting
Drivers of Sustainable Procurement Practices
CARROTS
STICKS
Competitive
Advantage
84% (Top 2 box)
Brand
Risk
96%
Cost Reduction
81%
Compliance w/
Laws & Regs.
93%
Financial
Risks
87%
Client/Consumer
Support
93%
Do the Right Thing
79%
Source: “Sustainable Procurement: Time to measure value
creation!”, Whitepaper based on HEC/EcoVadis2013 – 6th
Sustainable Procurement Barometer
Activism, incl.
Social Media
67%
4
© 2015 NJH Sustainability Consulting
Drivers of Sustainable Procurement Practices
Create Competitive Advantage
• Actively managing and planning for
climate change => 18% higher ROI
performed better than average on GHG
emissions => 73% better return over
the past 5 years than the S&P 500
• Investing in carbon reductions => 50% • Systematic sustainability management
lower volatility of earnings over the
=> higher share price
past decade & 21% stronger dividends
• Investing across U.S. companies that
“Foodservice companies that respond proactively and creatively to critical consumer demands
[around sustainability] will reap significant reputational benefits, enhanced profit opportunities
and greater shareholder value.”
Sources: CDP S&P 500 Climate Change Report 2014; http://www.newsweek.com/understanding-newsweeks-2014-green-rankings-253545;
Technomic (“Building a Better Foodservice Business through Sustainable and Responsible Practices”), Feb. 2014
5
© 2015 NJH Sustainability Consulting
Drivers of Sustainable Procurement Practices
Cultivate Client/Consumer Support
If a Company Supports Social or Environmental Issues:
96% of global citizens will have a more positive image of the company
94% will be more likely to trust the company
93% will be more loyal to the company
91% likely to switch brands to support a good cause (if similar price/quality)
92% would buy a product with a social and/or environmental benefit
• 67% have done so in past 12 months
90% would boycott a company for irresponsible business practices
• 55% have done so in past 12 months
Source: http://www.conecomm.com/2013-global-csr-study-release;
http://www.conecomm.com/stuff/contentmgr/files/0/fdf8ac4a95f78de426c2cb117656b846/files/2013_cone_communicationsecho_global_csr_
6
study.pdf
© 2015 NJH Sustainability Consulting
Drivers of Sustainable Procurement Practices
Anticipate Resource Scarcity, Volatile Prices
& Supply Chain Disruptions
“The common denominator between water wars, climate change, social unrest and other direct
and indirect consequences of environmental damage is economic risk.”
Sources: Global Risk Report (2015 Edition), World Economic Forum, Jan. 19, 2015; http://www.greenbiz.com/article/environmenteconomic-threat-business-risk-sustainability
7
© 2015 NJH Sustainability Consulting
Drivers of Sustainable Procurement Practices
Respond to Activism from NGOs, Social Media
& Investors
“In a hyperconnected world, in which organizations are under greater
scrutiny from all quarters, [global supply chain] transparency will be a
critical attribute.”
Source: “Megatrends 2015 – Making sense of a world in motion,” EY
Shareholder
Proposals
8
© 2015 NJH Sustainability Consulting
Drivers of Sustainable Procurement Practices
Activists Rate Companies
Sources: http://www.behindthebrands.org/en/company-scorecard; http://forest500.org/forest500/companies?f%5B0%5D=field_industry_sector%3A30
9
© 2015 NJH Sustainability Consulting
Drivers of Sustainable Procurement Practices
Investor Groups Rate Companies
Scores on global water risk management:
Score /Company
Score/Company
Agricultural Products:
29/Bunge
20/Chiquita Brands
7/Fresh Del Monte
Packaged Food:
70/Unilever
64/Nestle
57/General Mills
55/PepsiCo
54/Kellogg Co.
43/Mondelez International
31/ConAgra Foods
31/Keurig Green Mountain
27/J.M. Smucker
26/Hershey
13/Dean Foods
6/Kraft Foods Group
1/Pinnacle Foods
Beverage:
67/Coca Cola Company
44/Molson Coors Brewing
29/Brown-Forman
1/Monster Beverages
Meat:
33/Smithfield Foods
11/Hormel Foods Corp.
9/Perdue Farms Inc.
8/Tyson Foods
*Companies scored on 0-100 point
basis
Source: http://www.ceres.org/resources/reports/feeding-ourselves-thirsty-how-the-food-sector-is-managing-global-water-risks
10
© 2015 NJH Sustainability Consulting
Best Practices in Sustainable Procurement
Standard Compliance Tools Are Not Enough
Checklist
1. Make a corporate commitment
1. Map your supply chain
2. Articulate priority issues &
communicate expectations
1. Set performance standards & assess
suppliers (baseline)
2. Monitor supplier progress & drive
performance improvements
3. Participate in industry initiatives
4. Be transparent
11
© 2015 NJH Sustainability Consulting
Best Practices in Sustainable Procurement
Consider Innovative Procurement Tools
Set ambitious long-term goals
Use procurement as a tool for economic
or environmental development
Adopt a total cost model or
Environmental P&L
Enforce code of conduct &
disclose supply chain problems
12
© 2015 NJH Sustainability Consulting
Best Practices in Sustainable Procurement
Consider Innovative Procurement Tools
Include sustainability criteria
in RFPs & supplier contracts
Partner with environmental groups
for expertise, credibility & impact
Be proactive in adjusting
procurement strategies
Know when to
make only
small changes,
maximizing
ROI
13
© 2015 NJH Sustainability Consulting
Contact Information
Nancy Himmelfarb
NJH Sustainability Consulting
www.himmelfarb.com
[email protected]
14
© 2015 NJH Sustainability Consulting