Unilever and Nestlé are now neck and neck in a rigorous assessment of supply chain policies and practices. Launched in February 2013, the Behind the Brands campaign has successfully used the power of consumers and investors to call on the world’s ten largest food and beverage companies (the Big 10) to publish new commitments to improve how they address issues across seven themes - climate change, water, women, workers, smallholder farmers, land and transparency.
The Big 10 – ABF, Coca-Cola, Danone, General Mills, Kellogg, Mars, Mondelez, Nestlé, PepsiCo and Unilever – are in a unique position. These companies have extensive supply chains, where they can use their power to change how their suppliers conduct business. As the leaders of a $7 trillion industry, they have the size and reach to guide the food and beverage sector into a new era of fair and sustainable practices. To achieve this, they must lead by example. The good news is that they are improving. The challenge for the Big 10 is that they must continue to strengthen their approach to managing key issues if they are to drive sustained improvements within global supply chains.
Improvers at top and bottom of the ranking
Since the last update of the Behind the Brands scorecard in February 2014, all of the Big 10 have published new policies or assessments relating to the issues covered within the campaign. The latest update of the scorecard sees all companies apart from Danone improving their score in at least one of the seven themes. The greatest improvements in score have been recorded by PepsiCo (with an increase of 11% since February 2014), followed by the company previously ranked 10th, General Mills (with an increase of 9%). The two companies at the top of the scorecard, Nestlé and Unilever also saw significant increases of 6% and 7% respectively.
First place - Nestlé vs. Unilever
The two leading companies are racing ahead of the other eight, with both having demonstrated real improvements in their approach to responsible sourcing. Unilever’s score has increased in the workers, land, transparency and gender themes, with the company having stepped up from second to join Nestlé in first place.
Unilever’s new Responsible Sourcing Policy has contributed to the company’s improved score, particularly in the workers and land themes. The policy provides a framework for the company to work with suppliers to ensure they demonstrate continuous improvement in the management of social and environmental issues. Unilever has published key dates by which it expects all of its strategic suppliers to firstly meet mandatory requirements, and then to improve to achieve good practice standards. Beyond this, the Responsible Sourcing Policy defines best practice standards, which Unilever encourages suppliers to work towards.
As suppliers improve their practices from the mandatory requirements to the good and best practice standards, it should lead to better conditions for the people hidden within Unilever’s supply chain. For example, the mandatory requirements expect that all workers receive wages that are at least in line with legal minimum wages or relevant industry standards (whichever are higher). However, to meet the good practice standards, suppliers will be required to go beyond this by taking a living wage approach to fair compensation that considers whether wages are enough to both meet workers’ basic needs and to provide a level of discretionary income.
Nestlé has a new score of 9 in the climate change theme, which is the highest ever score in the scorecard. The increase has been influenced by a new responsible sourcing commitment, which links Nestlé’s Commitment on Climate Change to its Supplier Code. In July 2014, Nestlé also made new commitments to protecting the land rights of small-scale farmers. In its commitment, Nestlé recognized that a lack of secure legal land rights affects an estimated 1,110 million people globally. As recognized by Oxfam in August, the company will therefore not only seek to manage relevant issues within its own operations and supply chain but will also work with external stakeholders to support land rights.
General Mills and Kellogg climate change scores jump
In May 2014, the Brands the Brands campaign set out to drive food and beverage companies to do more to mitigate climate change. Over 238,000 supporters took action to call on General Mills and Kellogg to improve their policies. First General Mills and then Kellogg responded with bold new commitments for mitigating climate change. These commitments have been reflected in improved scores, with General Mills increasing from 2 to 5 in the climate change theme and Kellogg increasing from 4 to 6. Crucially, both companies have committed to implementing industry-leading science-based targets to reduce greenhouse gas emissions, including supply chain emissions from agriculture.
Moving from policy to practice
Publishing new policies is commendable; however, the key to improving the lives of farmers, women and workers within global supply chains will be ensuring that these policies are effectively implemented in practice. We’ve already seen positive indications that companies are prepared to follow through on commitments and Oxfam will continue to engage with companies to monitor and support their progress. For example, since last year, Oxfam has been publicly tracking the progress of Mars, Mondelez and Nestlé in implementing commitments they made to women cocoa farmers through a gender roadmap.
All three companies have now published third-party social impact assessments, which consider the impact of their cocoa sourcing on women. The need for companies to collaborate with peers, suppliers (including major traders) and other external stakeholders such as NGOs, community groups and government-organisations, is crucial in addressing many of the issues highlighted in the Behind the Brands campaign. At the same time, consumers are increasingly demanding more transparency and traceability, creating a need for systematic industry-wide mechanisms to monitor global commodity supply chains. There is therefore a unique opportunity for pre-competitive collaboration, where companies can share best practice, engage in advocacy towards governments and other regulators, and systematically engage suppliers within shared supply chains.
What’s next for the Big 10?
There is still significant scope for all ten companies to improve across the seven themes of the scorecard. For example, while we’ve seen incremental improvements in the water and transparency themes, there remains much potential for bold action.
We will continue to develop the scorecard assessment to ensure it reflects emerging best practice across the seven themes. With significant improvements in the score of General Mills, which had been ranked 10th in the scorecard and with companies in the middle of the scorecard demonstrating that they are willing to continue to make new commitments, all of the Big 10 remain in the running in the race for the top.
How you can help
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