Chocolate giant Mars is exploring ways to turbo-charge its recently announced billion-dollar sustainability programme.
The US$35 billion confectionary and pet care company wants to infuse the programme with “a sense of urgency” as it looks to cut deforestation and human rights abuses out of its operations, said its regional president Ehab Abou-Oaf at the Responsible Business Forum in Singapore on 22 November.
The maker of Snickers, M&Ms and Whiskers in September announced an ambitious ‘Sustainable in a generation’ initiative, a plan to fix its global supply chain and make a positive impact on the food industry by pumping US$1 billion into projects to tackle climate change, poverty and resource scarcity over the next five years.
It is the boldest sustainability effort in the private company’s 106-year history, and is the fruition of a decade of work to address the Mars family’s desire to create a business that will last for another century and beyond.
“This is not just about charity or philanthropy—it is an investment,” Abou-Oaf, president, Asia, Middle East & Africa, Mars Wrigley Confectionery told delegates last week.
“We are very conscious and clear that unless we have a thriving agricultural sector, the whole industry will be at risk. Not just us, (but) everybody who makes chocolate,” he said.
Abou-Oaf acknowledged that while Mars has been actively pursuing a sustainability agenda around the company’s core values of responsibility, mutuality, efficiency, quality and freedom for the last 10 years, the company has been later to talking about its efforts than some of its competitors, which include Unilever, Mondelez and Ferrero.
But now he said the firm is keen to communicate its sustainability efforts and engage with partners outside of its usual sphere of influence—a working principle the company calls “uncommon collaboration”—to get results faster.
This is not just about charity or philanthropy—it is an investment.
Ehab Abou-Oaf, president, Asia, Middle East & Africa, Mars Wrigley Confectionery
An SDG a day…
The focus of the plan—unveiled during the United Nations General Assembly Week and Climate Week in New York on 18 September—is in Asia and Africa, where the company sources its key raw materials cocoa and palm oil.
Both sectors face challenges that Mars wants to tackle, including deforestation, poverty and the exploitation of plantation workers and local communities where raw materials are sourced.
The cocoa trade is grappling with declining productivity as farmers struggle with depleted soil, pests and disease, while the palm oil industry faces issues such as peatland sinking and haze air pollution that has blighted Southeast Asia for generations.
At RBF, Mars hosted its inaugural stakeholder engagement session with Eco-Business with the aim of seeking views on how to accelerate its sustainability programmes in Asia.
These include a push to source palm oil from traceable sources, a training programme for cocoa farmers, and inclusive business models that support some of the region’s poorest people.
The programmes fall under the three pillars of Mars’ sustainability strategy — healthy planet, thriving people, and nourishing wellbeing, which are aligned with three United Nations Sustainable Development Goals (SDGs)— 1: ending poverty, 3: ensure healthy lives and 13: fight climate change.
Boosting cocoa productivity
Currently, Mars sources about half of its cocoa—-the main ingredient in chocolate—-from certified sustainable farmers. But the company aims to increase that proportion to 100 per cent by 2020, and earlier this month, along with members of the World Cocoa Foundation, committed to no further forest clearing for cocoa plantations at the UN Climate Change Conference in Bonn.
The company’s main cocoa sustainability project in Asia is in Indonesia, the world’s third largest cocoa producer, where it trains farmers to be “cocoa doctors”, skilled at growing more on less land. To date, farmers in Sulawesi, Indonesia have improved yields by 70 per cent through Mars’ programmes.
At the stakeholder workshop, Fay Fay Choo, Asia cocoa director for Mars, said that her company was open to working with other parties on ways to address the soil depletion issue in Indonesia. The right kind of fertiliser was needed to increase cocoa yields, and this in turn will require financial support for farmers.
Financing is out of reach for many farmers in Indonesia, and participants in the cocoa group suggested that technologies such as blockchain could help bring greater transparency to the supply chain, and “enable us to bring farmers closer to the banks.”
Crop diversity — persuading farmers to grow crops other than cocoa — was another idea mooted at the workshop to boost the resilience of farmers and halt deforestation. “Farmer resilience and boosting income per hectare will require a diversified allocation of crops, even within a single hectare—-it can be done,” said Choo.
The biggest challenge in transforming its cocoa business, agreed the participants, is how to engage with government, particularly in Indonesia, where a highly decentralised structure makes working with the authorities difficult.
“How can we as one industry voice engage the government on the issues where we can work together in support, to make sure we are able to better reach farmers?” asked Choo.
On this question, participants agreed that industry associations and platforms will be a good way to consolidate efforts by different companies on engaging the government on specific issues.
How to foster trust in the palm oil supply chain?
Government engagement is also the biggest challenge for the palm oil sector, it emerged at the workshop, where ideas were proposed for how the company can foster a deeper sense of trust in the palm oil supply chain.
For a large consumer goods firm, Mars uses a relatively small amount of palm oil—80,000 tonnes a year or about 0.1 per cent of global supply. The company has bought only certified oil through the Roundtable on Sustainable Palm Oil since 2013, and in 2014 embarked on a sustainable palm policy to ensure its supply chain is free from deforestation and human rights abuses.
The company now says that 99 per cent of the oil it uses can be traced back to the mill, and 40 per cent to the plantation where it is grown. However, despite the industry’s efforts, major consumer firms including itself, Nestle and Hersheys were recently linked to deforestation through its suppliers in Indonesia’s protected Leuser ecosystem, reflecting the complexities in tracing palm oil supply. The ecosystem is home to Sumatra’s critically endangered elephants, orangutans and tigers.
But as a relatively new player in the sustainable palm oil space, David Pendlington, Mars’ senior manager for sustainable sourcing, noted that the company had an opportunity to be an “enthusiastic follower”.
“If you’re new and anonymous in this whole conversation [about palm oil], you can play an interesting role. We don’t have any baggage. We could really make a difference by saying, we just want to do the right thing,” said Pendlington.
Not only is connecting with the Indonesian and Malaysian governments at the right levels key to engendering trust, getting to know and helping individual smallholder farmers will help, it was suggested at the workshop.
“What we want to do as a business is to frame the conversation such that by working together [with government] we can make a difference to the livelihoods in the landscape that we rely on. By doing that, we can address challenges such as deforestation and human rights.”
Better partnerships for inclusive business
The third workshop session explored how Mars can create new go-to-market strategies while tackling poverty in Africa and the Philippines.
One example of Mars’ ambition to be the world’s “most mutual company” is the Maua project in East Africa. Mutuality is the principle of creating mutual benefit with consumers, suppliers and distributors.
Consumers in city slums and the countryside—areas that lack infrastructure and investment—are difficult to reach through traditional channels, so Mars partnered with micro-entrepreneurs living in these areas to act as sales agents.
The programme has so far recruited 650 micro-entrepreneurs in Kenya, providing them with a stream of income while generating around US$7 million in sales, representing nearly 15 per cent of total sales in the region. A similar project has been rolled out in Manila, with plans for launches in China and India.
Identifying the right people—a trusted middleman—to strike relationships in poor areas is a key challenge to setting up a viable business, said Clara Shen, director, emerging markets for Catalyst, Mars’ innovation arm.
So is aligning goals between corporates and non-government organisations, she noted. “There should be common goals—even though both sides probably won’t agree on everything, and how it should be done.”
A commitment to delivering a business inclusion project to ‘the last mile’ in an underprivileged area means that Mars should consider providing the infrastructure that would enable the project, Shen said.
Multi-stakeholder working groups involving other companies could help move projects forward quicker, she added. “Multiple perspectives are a good thing,” she said. “Together, we can help each other move projects forward that are stuck.”
In summarising the workshop, Abou-Oaf noted that stepping on the accelerator on Mars’ sustainability efforts would require all parties to “spread the word”.
“We can achieve a snowball effect by telling people what we’re doing,” he said of the US$1 billion 5-year sustainability plan.
“Let’s stay optimistic, and believe that when small efforts add up they help us deliver against big objectives.”
“We are determined to get there, but we need your help. It’s time to embrace a sense of urgency,” he said.
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