Supply chains = risk. Risk of contamination. Risk of changing climates. Risk of land-grabs. Even, tragically, risk of factory collapse.
That’s why anti-poverty charity Oxfam ranked the big 10 food and beverage companies on how they are managing their supply chains. The result is a scorecard ranking of Nestle, Unilever, Coca Cola, Mars, Pepsico, Mondelez, Danone, General Mills, Kellogg’s and Associated British Foods.
The scores, published after 18 months of research, were disappointing. While some companies are doing better than others, no company gets a passing grade across the seven themes covered. In fact, no company gets beyond a seven out of ten on any theme. This is disappointing, as a good company should have most of these bases covered through policies addressing the key sustainability issues in its supply chains.
An overarching challenge is that, when it comes to their supply chains, companies are secretive. They share precious little about the conditions under which their ingredients are grown, and beyond some isolated projects, they share even less about what they are doing to shape the behaviour of their suppliers.
To rank the companies, we worked closely with academics, industry experts, Oxfam staff in low-income countries, and the companies themselves. We asked 270 questions across seven themes critical to the conditions of the poorest people in the food system, focusing our efforts on what the companies are doing to address core business in their supply chains:
- How we improve conditions for women, small-scale farmers and farm workers.
- How we promote equitable and sustainable access to land and water.
- How we reduce carbon emissions and help farmers adapt to climate change.
- How transparently the companies report their corporate activities.
We started with the companies’ supplier codes. Most of what goes into a product does not come from a farm owned by the company itself. The supplier codes contain a minimum set of standards. For example, Unilever’s ‘Sustainable Agriculture Code’ tells a supplier to provide training to farmers and to provide safe working conditions for workers. Yet, across the board, the companies fail to address in their supplier codes land grabbing, gender inequality or reduction in agricultural emissions.
Because we don’t know the extent to which the supplier codes are enforced, we next looked at the broader challenges that face agricultural communities. For example, we rewarded Coca Cola, Nestle, Pepsico and Unilever for publically acknowledging that women lacked access to training.
Then we asked the companies how well they understood their supply chains. Are the companies focussing their land policies on countries where there is weak land governance, for example, or their water policies on regions where water is in short supply? Few companies could demonstrate that they are tracking these issues, with none able to identify where women were working, where land use changes were happening and where there was a prevalence of temporary labour.
Finally, once a company identified an issue, we wanted to see a commitment to tackling it. We rewarded nine of the companies for setting targets to reduce water use, while none of the companies picked up a point for committing to pay small-scale producers a living wage that allows them to work themselves out of poverty.
We know that conditions on farms around the world can leave much to be desired. Some aren’t paying adequate wages to workers or prices to small-scale farmers. Others are exploiting land and water in developing countries, depriving local communities of their sources of food. While some companies claim world-class records on women’s rights, those rights don’t trickle down to the women in their supply chains in developing countries who get paid very little, often less than men for the same work. Companies are happy to put women front and centre in their advertising, but they leave them last in their supply chains and are doing next to nothing to change this.
Oxfam is working with our supporters, the financial sector, and the companies themselves to improve the sustainability of big food production. We’re calling for companies to:
- Identify areas of high risk and analyse and disclose their impact on supply chain issues.
- Make explicit commitments to strengthen their supply chains.
- Raise their expectations of suppliers and support them to improve their practices.
Already, we are seeing that investors agree. In February, we hosted a launch event at Bloomberg’s headquarters in New York. In March, we chaired a webinar with speakers from UBS, F&C and Calvert Investors. In June, we convened a round-table with Aviva Investors and eight of the 10 companies.
When engaging finance, we make the moral case, but we also make the business case. A good investment is a company that knows its supply chains, is resilient to shock and is well-placed to survive the crunch of growing demand for resources and stagnating supply. A growing list of financial sector organisations are supporting Behind the Brands, calling for greater transparency from the companies in their supply chains.
We’ll update the scorecard when the companies update their policies because, for investors, the direction towards making supply chains more ethical is as important as the scores themselves.
With decades of experience and on-the-ground knowledge, Oxfam has the power to amplify the demand of consumers, with the convening power to improve the sustainability of big food production. With Behind the Brands, the call to action is clear: The food system is broken. Act now and we can improve the lives of millions of farmers who go to bed hungry each night.
Erinch Sahan is a private sector policy adviser at Oxfam. He led the team across Oxfam International who put together the scorecard.
Will Martindale is a financial sector policy adviser at Oxfam. He leads the Behind the Brands investor engagement.
Oxfam’s Behind the Brands Scorecards was launched on 26 February 2013. For more information, see: http://oxfam.org/behindthebrands