May 19, 2015 Nancy Himmelfarb NJH Sustainability Consulting himmelfarb.com Sustainable Procurement: It Matters!

May 19, 2015

Nancy HimmelfarbNJH Sustainability Consulting

himmelfarb.com

Sustainable Procurement: It Matters!

© 2015 NJH Sustainability Consulting2

Sustainability Pressures in Food Industry

Local Pesticide-free

Humane

Antibiotics-free(Never Ever)

Hormone-free(Never Ever)

NATURAL

Low Carbon Footprint Cage-free

MSC-certified

Fair Trade

Non-GMOAnimal Welfare

Approved

ORGANIC

TRANSPARENCY

Sustainably-produced

Low Water Footprint


Sustainability Pressures in Other Industries

Local

Low Carbon Footprint

Fair Trade

ORGANIC

Indigenous

Conflict Minerals & Other Restricted

Substances

Low Water Footprint

Zero Waste

TRANSPARENCY

Hazardous Chemicals (Toxins)


Drivers of Sustainable Procurement Practices

Financial Risks87%

Activism, incl. Social Media

67%

Compliance w/ Laws & Regs.

93%

CARROTS STICKS

Cost Reduction81%

Competitive Advantage

84% (Top 2 box)

Brand Risk96%

Client/Consumer Support

93%

Do the Right Thing79% Source: “Sustainable Procurement: Time to measure value

creation!”, Whitepaper based on HEC/EcoVadis2013 – 6th Sustainable Procurement Barometer


Create Competitive Advantage

• Actively managing and planning for climate change => 18% higher ROI

• Investing in carbon reductions => 50% lower volatility of earnings over the past decade & 21% stronger dividends

• Investing across U.S. companies that

performed better than average on GHG emissions => 73% better return over the past 5 years than the S&P 500

• Systematic sustainability management => higher share price

Sources: CDP S&P 500 Climate Change Report 2014; http://www.newsweek.com/understanding-newsweeks-2014-green-rankings-253545; Technomic (“Building a Better Foodservice Business through Sustainable and Responsible Practices”), Feb. 2014


“Foodservice companies that respond proactively and creatively to critical consumer demands [around sustainability] will reap significant reputational benefits, enhanced profit opportunities and greater shareholder value.”


Cultivate Client/Consumer Support

Source: http://www.conecomm.com/2013-global-csr-study-release; http://www.conecomm.com/stuff/contentmgr/files/0/fdf8ac4a95f78de426c2cb117656b846/files/2013_cone_communicationsecho_global_csr_study.pdf

96% of global citizens will have a more positive image of the company

94% will be more likely to trust the company

93% will be more loyal to the company

91% likely to switch brands to support a good cause (if similar price/quality)

92% would buy a product with a social and/or environmental benefit• 67% have done so in past 12 months

90% would boycott a company for irresponsible business practices• 55% have done so in past 12 months

If a Company Supports Social or Environmental Issues:



Anticipate Resource Scarcity, Volatile Prices & Supply Chain Disruptions

Sources: Global Risk Report (2015 Edition), World Economic Forum, Jan. 19, 2015; http://www.greenbiz.com/article/environment-economic-threat-business-risk-sustainability

“The common denominator between water wars, climate change, social unrest and other direct and indirect consequences of environmental damage is economic risk.”

Water Crises (#1 in terms of potential impact)

Extreme Weather Events (#2 in terms of likelihood)

TOP GLOBAL

RISKS



Respond to Activism from NGOs, Social Media & Investors


Shareholder Proposals

“In a hyperconnected world, in which organizations are under greater scrutiny from all quarters, [global supply chain] transparency will be a critical attribute.”

Source: “Megatrends 2015 – Making sense of a world in motion,” EY


Sources: http://www.behindthebrands.org/en/company-scorecard; http://forest500.org/forest-500/companies?f%5B0%5D=field_industry_sector%3A30

Activists Rate Companies


© 2015 NJH Sustainability Consulting10Source: http://www.ceres.org/resources/reports/feeding-ourselves-thirsty-how-the-food-sector-is-managing-global-water-risks

Scores on global water risk management:


Investor Groups Rate Companies

Score /CompanyAgricultural Products:29/Bunge 20/Chiquita Brands7/Fresh Del Monte

Beverage:67/Coca Cola Company44/Molson Coors Brewing29/Brown-Forman1/Monster Beverages

Meat:33/Smithfield Foods11/Hormel Foods Corp.9/Perdue Farms Inc.8/Tyson Foods

Score/CompanyPackaged Food:70/Unilever64/Nestle57/General Mills55/PepsiCo54/Kellogg Co.43/Mondelez International31/ConAgra Foods31/Keurig Green Mountain27/J.M. Smucker26/Hershey13/Dean Foods6/Kraft Foods Group1/Pinnacle Foods

*Companies scored on 0-100 point basis


Best Practices in Sustainable Procurement

1. Make a corporate commitment

2. Map your supply chain

3. Articulate priority issues & communicate expectations

4. Set performance standards & assess suppliers (baseline)

5. Monitor supplier progress & drive performance improvements

6. Participate in industry initiatives

7. Be transparent

Checklist

Standard Compliance Tools Are Not Enough



Consider Innovative Procurement Tools

Set ambitious long-term goals

Use procurement as a tool for economic or environmental development

Adopt a total cost model or Environmental P&L

Enforce code of conduct &disclose supply chain problems



Consider Innovative Procurement Tools

Include sustainability criteriain RFPs & supplier contracts

Partner with environmental groups for expertise, credibility & impact

Be proactive in adjustingprocurement strategies Know when to

make only small changes,

maximizing ROI


Contact Information

Nancy HimmelfarbNJH Sustainability Consulting

[email protected]

Documents

May 19, 2015 Nancy Himmelfarb NJH Sustainability Consulting himmelfarb.com Sustainable Procurement: It Matters!