In its new report on supply chains, The Journey to Sustainable Food, a three-year update on the Behind the Brands campaign, Oxfam assesses that, while progress has been made, particularly on the issues of protecting land rights, reducing greenhouse gas emissions, and tackling gender inequality, more needs to be achieved. While many commitments have been promised, the report says that: “companies must now ensure that their suppliers actually change their practices in line with the commitments made. And… companies must go further and adopt new business models in their supply chains to ensure that more of the power and the value reaches [sic] the farmers and workers who produce their ingredients.” The report also challenges the conventional wisdom that if more of the value that food companies’ products generate reaches the farmers and workers who produce them then less of that value will reach shareholders.
Oxfam launched its Behind the Brands campaign in February 2013 to score the “Big 10” food and beverage companies on their social and environmental policies and practices. The “Big 10” comprises Associated British Foods (ABF), Coca-Cola, Danone, General Mills, Kellogg, Mars, Mondelez International, Nestlé, PepsiCo, and Unilever.
The scorecard works by evaluating supply chains against seven issues: land, women, farmers, farm workers, climate change, transparency, and water. Each issue is scored one to 10, and the combined scores are presented as percentages. In the 2016 update, Unilever had the highest score, 74%, and one of the highest increases, 26% over its 2013 score. Nestlé received the next highest score of 69%. The worst scorers include one French company: Danone; two U.S. companies: General Mills and Mondelez (a subsidiary of Kraft Foods and owner of Cadbury); and one British company ABF.
Companies’ approaches to land rights received the lowest scores in 2013, and “none had credible land rights policies,” said the report. While approaches have improved, the report continues: “policy commitments still need to be translated into implementation” and companies must engage with suppliers so that they are committed to the same principles preventing “land grabbing.”
In respect to how women are treated in supply chains, the report notes, none of the companies score highly. The highest score is six, which Unilever, Kellogg, and Coca-Cola achieved. “The case for companies to empower women,” says the report, “is strong, and doing so will mean improved quality, productivity, and reliability in their supply chains.” This conclusion is based on arguments from another Oxfam report, Gender Equality, It's Your Business, which quotes a UN Food and Agriculture Organisation report from 2011 saying: “If women in rural areas had the same access to land, technology, financial services, education, and markets as men, agricultural production could be increased and the number of hungry people reduced by 100–150 million.”
Another area in which none of the companies scored particularly high is transparency. Mars and Kellogg improved their transparency disclosing their suppliers in 2015. “However,” notes the report, “most of the disclosures are made anecdotally and none of the Big 10 makes a systematic, easy-to-find disclosure of their suppliers and commodities.”
On the treatment of small-scale farmers, Unilever and Nestlé lead the pack again, but, as noted above, this is one of the issues that Oxfam says needs most work, to ensure that “revenue from production is high enough to cover production costs along with the margins necessary for a decent life.” Unilever is the only company in the Big 10 that has asked its suppliers to “make fair deals with small-scale farmers and to support organizations that enable farmers’ rights and protect their livelihoods.” Though Nestlé has also “carried out and published several impact assessments and has the most advanced disclosure of sourcing from small-scale farmers among the Big 10.”
Many of the Big 10 have barely shown any improvement on the issue of labour rights for farm workers in their supply chains, and “many are not showing an interest in empowering farm workers so that they can provide for their families.” On the other hand, Unilever scored eight out of 10 with a strategy in place to raise low farmer wages and has taken steps to implement this.
Next on the list: climate change, with a focus on greenhouse gas emissions. The report notes that the “major part of these emissions stems from agricultural production in supply chains, and in 2014 this was not covered by the emissions reduction targets the companies had set.” Prior to the 2016 report, Kellogg and General Mills adopted ambitious science-based targets to reduce GHGs across both their operations and supply chains. Both companies also made commitments to “deforestation-free commodity sourcing.” Such were these improvements that, for example, Kellogg’s score went from two in 2013 to eight in 2016.
Lastly, PepsiCo, General Mills, Unilever, Kellogg, and Nestlé have all made or reconfirmed commitments to respect the human right to water. While most of the companies recognise the risk to their supply chains of water scarcity, scores are still poor; Danone’s even went down between 2013 and 2016.
Why are these issues important to supply chain efficiency, to profits and reputation? First of all, consumers care. The report notes that the demand for sustainable food is growing, but more importantly a general awareness of where food comes from and how it is produced affects consumer buying choices. Many investors are also committed to enforcing supply chain efficiency and fairness to protect their investments, such as the 33 investors, representing $1.4 trillion of assets under management, who published an open letter calling for greater accountability and transparency among the Big 10. In addition, addressing the issues raised by the report means that risks to supply chains are reduced. In some responses, more progressive companies felt they could be disadvantaged. In one conversation between an Oxfam researcher and an unnamed company senior manager, the manager said: “if we unilaterally decide to pay more for our milk, we end up with less profits to invest into our marketing, eventually losing market share and eventually losing to companies who aren’t willing to pay higher prices for their milk.”
The report notes that regulation could create an even playing field for businesses and that governments should be enforcing the UN Guiding Principles on Business and Human Rights, which call on them “to protect human rights and provide access to remedies; to set and enforce policy frameworks that manage natural resources sustainably; and favour the interests of farmers, workers, and communities when they deal with companies in the food system.” In other words, unless companies act unilaterally or in concert, there will be more regulations with which to comply.