The challenges to driving responsible sourcing are vast, and most are driven by a focus on the immediate versus thinking longer-term. Responsible sourcing requires thinking well into the future and thinking of all stakeholders involved versus just returns for shareholders. It may require foregoing an immediate/short-term benefit (either increased sales or decreased costs) for an approach that creates long term value. Tackling these challenges requires multiple stakeholders to come together to share responsibility for costs, risks, and to share complementary strengths.
For example, to create stronger local supply chains and a secure long term supply of high quality coffee, Nespresso works with Acumen and Technoserve to support a local coffee cooperative as they develop their own central wet mill. This approach requires patience and a significant investment in the capabilities of the coffee cooperative by everyone involved. In the long-term, this approach will create local ownership, increased incomes, water conservation, and loyalty from farmers. But it requires imagination, and commitment to the long-term well being of coffee growing communities. It is not profitable in the short term.
Yes - you raise an interesting question Darrell about where âresponsible sourcingâ ends. Working with smallholder farmers on enhancing productivity sustainably, in ways that are aligned with their own approach to managing their risks, could have benefits for the companyâs long-term security, reliability and quality of supply, in addition to the possible social and environmental gains.
Be prepared for a long and complex journey: WWF has a history of working in deep collaboration with companies on supply chain issues, so we understand this can be incredibly complex and technical work. It can also take a long time â businesses need to be prepared for a long haul in pursuit of truly transformational commitments, but the prize is worth it. For example, weâve been working in partnership for the last four years with seafood brand John West and their parent company Thai Union to shift their products to being certified sustainable. International seafood supply chains are notoriously complex and it took at least two years of hard work and multi-stakeholder influencing before we could see changes starting to happen on the water. We still have a long journey ahead of us, but the determination and commitment on both sides of the partnership towards our long-term goal have kept us on task.
Itâs important to set credible, science-based targets and be honest about confronting the real impacts your supply chains are having on people and planet. Plastic pollution is an urgent and significant threat and we welcome the fact that so many businesses are waking up to the issue and taking steps to tackle it, but we shouldnât allow this to distract from tackling other, perhaps greater impacts â clearly itâs essential that all businesses address their carbon emissions. But businesses must also consider setting targets for not just reducing, but having a positive impact on soil health, water, biodiversity.
Also - materials sourced may be incredibly long and complex and seem too much to tackle. Itâs important to look at your business see where you have a material impact and where your key risks might lie. Then set policies, strategies and targets to begin to address the most important ones and the areas in which you can have greatest effect.
Certification remains an important tool to deliver on responsible sourcing commitments. It provides a level of assurance that best practices are being applied on farm and through the supply chain. But it is only one tool and others are needed to address the challenges faced, including supporting broader initiatives and collaborative efforts, engaging with your supply chain, engaging in jurisdictional/landscape projects and supporting producers, as well as taking your consumers on a journey to help them want and make more sustainable choices.
@Henning, coming from the Corporate sustainability side of the work, we did quantify (in $$'s) the profit coming from employee happiness (in the form of the cost of recruitment and retention) and the cost of positive and negative PR/relationships with communities and other stakeholders (via impact to brand scores, which correlated to sales $).
Iâm with you, both are critical short and long term factors.
Henning, this is an interesting and pertinent point. Can you point to any case studies or examples of large businesses that have prioritized and succeeded to facilitate SME growth in the regions where they operate?
This is a good point - and the costs are often incurred in the short term, while many of the benefits to the business arrive over longer periods. This is often framed in investment terms but it can be almost impossible to quantify the diverse returns in the way you would when considering simpler cases of capital allocation trade-offs.
Thanks @yasminazaidman Your post also highlights the need to engage with financial markets, and move the needle on how long-term initiatives are being evaluated by investors.
@David - agreed. As a business unit manager, I was focused on what increased profits in the next 2-3 years. In hindsight, I wish I knew then how many NGOs I could have partnered with to help me do what is costly, subsized work now than could have been profitable (and scalable) down the line.
Hina, do these examples point towards any lessons on what it takes for a companyâs leadership to see the value of such a difficult and complex investment? Were these actions in response to already-identified business critical risks?
I would like to share an example around one our biggest challenges, which is safety in the road.
The transport sector in Mexico employs more than 360,000 people, of which 29% work in the category of general cargo auto transport and 21% in specialized cargo motor transport. CEMEX work more than 3,000 micro and small transport companies in Mexico. One of the biggest challenges is to ensure health and safety standards among all these different partners.
To accomplish this, we found out the many of these companies are self-employees or small businesses that lack of advanced system to ensure safety in the road and in their operations. We also found, that they face other challenges related to the management of their businesses. So, in order for them to be able to increase safety standards, they needed to strengthen other areas of their management first.
To address this, we partnered with FUNDES and VISA in 2016 to create a model in which we can assess each vendor and identify where we can support training against five main areas: management, selling, logistics, quality and safety.
Today, the owners and drivers of these micro and small companies can be offered to participate in trainings. For company owners it is a 28 hrs training and for drivers 13 hrs training. It has been contributing with our priority of zero injuries.
@David - yes the WWF-Thai Union partnership was borne of direct business risk off the back of a greenpeace campaign and increasing consumer demand for sustainable seafood
Darrell, we are familiar with Nestle and Jacobs Foundationâs education efforts in Cote dâIvoire and have provided case studies of innovative social enterprises working with cocoa growing communities in our latest report: Cocoa Interrupted - The Role of Social Enterprise in Cocoa Growing Communities. https://acumen.org/cocoa-interrupted-report/
Re the 70 bridge schools, do you have a plan for further scale and do you see it as Nestleâs role to provide or support education services in cocoa growing communities? Do you interact with government in order to do this?
Another example is weâve recently gone into partnership with Tesco with the overarching ambition of âhalving the environmental impact of the average UK shopping basketâ. A key part of delivering on this goal will be driving responsible sourcing practices throughout their supply chain to tackle some of the biggest issues like eliminating deforestation, minimising waste and restoring nature in food production.
But we canât achieve this alone, so weâll need to work in collaboration with other industry players to drive change at the pace and scale needed.
yes weâre intending to continue with bridge schools and hoping to continue the partnership with Jacobs, but naturally it depends on the results. We are engaged with the government, they are supportive and in fact have juts been on a tour of JF funded innovations. However they just donât have the money to continue this at scale