CHICAGO, ILLINOIS, US — Executives from the Kellogg Co., like many in the food and beverage industry, wondered how the coronavirus (COVID-19) pandemic would affect consumer interest in sustainability and social issues, said Amy Senter, chief sustainability officer.
Would the amount of interest change? Would it drop?
“We were so happy to see from our point of view that it has just accelerated,” she said in a Sept. 21 online panel discussion held as part of “Climate Week.”
People continue to buy brands owned by companies that hold similar values to them.
“We see that to continue to come through, continue to grow,” Senter said. “We’re grateful because we’ve been on that journey at Kellogg for a long time around having really good transparency.”
For sustainability efforts, she pointed to Kellogg, Battle Creek, Michigan, US, reducing greenhouse gas (GHG) emissions by 15% per lb of food produced from a 2018 baseline and how the company’s MorningStar Farms brand is tied to environmental and social governance, nutrition, and sustainability.
Kellogg, because of where the company sits in the supply chain, needs partners in its sustainability efforts, Senter said. Kellogg has no direct relationships with farmers and does not sell directly to consumers.
“But we are absolutely at the core of a number of relationships,” Senter said. “So how do we convene and help connect the dots and find different ways to have an impact on farms, to partner with NGOs (non-governmental organizations) that maybe have the technological solutions but maybe don’t have the access where our suppliers might have that access.”
Kellogg has worked with Archer Daniels Midland Co., Chicago, to source quinoa from Bolivia for Kellogg’s Kashi brand. ADM helped fund solar panels for the Bolivian farmers.
Speakers in the online panel spoke about ESG, which stands for environmental, social and governance factors.
Ray Young, executive vice president and chief financial officer for Chicago-based ADM, said that during recent virtual investor conferences he spent “an extensive amount of time” talking to investors from both Europe and the United States about ESG issues.
“The interest and questions that we are getting from investors are not only regarding what exactly, what specifically ADM is doing, but more importantly how we are thinking about ESG on a more strategic, more broad sense: How we’re holding ourselves accountable to sustainability, and how we’re showing continuous improvement in these areas,” he said. “The feedback we’re getting is they are not expecting us to achieve perfection overnight in the area of ESG, in the area of sustainability, but they do expect us to show continuous progress and to have a good reporting progress to at least ensure we are monitoring and measuring that progress.”
ADM this year set 2035 goals of reducing water intensity by 10%, achieving a 90% landfill diversion rate, reducing GHG emissions by 25%, and reducing energy intensity by 15%. The company is investing in innovation and technology to hit the targets, and ADM’s board of directors has created a sustainability committee to provide guidance and oversight, Young said.
ADM has over 900,000 acres enrolled in sustainable farming practices. Measuring ESG efforts on farms is crucial.
“This is a work in progress,” Young said. “We’ve got some pilot programs going right now with farmers in terms of collecting this data.
“I think that for many companies this is really the next focus area, the data collection aspect, getting the information that is going to allow us to drive toward the targets that we’ve established here. We’ve done pilots. It’s working. I think we’re going to learn from these pilots and keep evolving.”
Help comes from CDP, an international non-profit organization that drives companies and governments to reduce their GHG emissions, safeguard water resources and protect forests. Over 8,400 companies with over 50% of global market capitalization disclosed environmental data through CDP in 2019.
Bruno Sarda, president of CDP North America, likened measuring sustainability’s effect on the food and beverage industry to the X-ray machine’s effect on medicine long ago.
“Once you can see inside the patient, you kind of know where to intervene,” Sarda said. “That’s exactly what we do. We create, if you will, this transparency and mapping.”
Not being active in ESG areas is risky, he said. CDP sampled 200 companies and identified over $1 trillion in short-term risks, meaning three to five years, Sarda said. CDP also identified more than $2 trillion in potential opportunities associated with climate action. The cost to achieve the opportunities was just under $300 billion.
“So it’s about a seven times payback if you were to employ capital in the direction of solutions,” Sarda said.