The Technology Behind Responsible Sourcing at Ferrero
Italian confectionery company Ferrero places a strong emphasis on responsible sourcing across its supply chain. This culture is supported by participation in industry initiatives, company sustainability programmes and the use of technology to support ethical sourcing.
The company assesses the best way to source all its raw materials responsibly, such as cocoa and palm oil, as well as hazelnuts. Fundamental to Ferrero’s responsible sourcing approach are partnerships, collective engagements and supplier management. Its ethical sourcing expectations are outlined in its code of business conduct and supplier code.
Procurement and Ferrero’s sustainability strategy
One of the key pillars of its sustainability strategy is sustainable sourcing, and the company reported progress in meeting and exceeding many key targets in its 2022 sustainability report.
“The financial year was particularly challenging - war broke out, supply chains were disrupted, energy costs surged, and inflation grew alongside the cost of raw materials,” said Giovanni Ferrero, Executive Chairman of the Ferrero Group.“ In the face of these challenges, Ferrero has not only been able to grow, but to also make strong progress with a number of our sustainability targets – and, in some instances, exceed them,” he added.
Sustainable procurement progress at Ferrero
As part of Ferrero Farming Values (FFV), a comprehensive strategy spanning various commodities, the company is demonstrating how it is enhancing the sustainability of its ingredient sourcing while spreading knowledge and expertise throughout the value chain. In the fiscal year 2021/22, the FFV program facilitated personalised coaching for 32% of cocoa farmers on aspects like farm management and business planning, while a staggering 155,000 cocoa farmers participated in group training initiatives.
The sustainability report also highlights progress in achieving traceability down to the farm level, covering over 96% of the company's cocoa supply volume. The company reports 82% of the total cocoa volume was procured from farmer groups directly supported by Ferrero. Despite intricate supply-chain dynamics, the company has achieved an overall hazelnut traceability rate of 79%.
“Across each of the four key pillars of our sustainability framework, the report shows we have made strong progress towards the objectives we have set ourselves,” said Lapo Civiletti, Chief Executive Officer of the Ferrero Group. “Despite a challenging economic and geopolitical environment, the Group increased investments to continue to ensure high levels of quality, freshness and safety across all our products, while reducing our environmental impact.”
Satellite technology in ethical procurement at Ferrero
In 2021 Ferrero committed to using Starling satellite monitoring and verification services across all of its palm oil sourcing areas.
Using a combination of satellite imagery and on-the-ground expertise to monitor land cover change and forest cover disturbance in near real time it shows where potential deforestation occurs and let the company identify problems in its supply chain and drive positive change on the ground.
“Ferrero is fully engaged to secure a deforestation-free and exploitation-free palm oil supply chain, and we are continuously dedicated to finding innovative solutions that are able to support our commitment,” said Ferrero’s former Chief Procurement & Hazelnut Company Officer, Marco Gonçalves at the time.
“Starling offers a state-of-the-art technology which allows us to reliably monitor potential land use change across all our supply chain, enabling us to take action”, said Mr. Gonçalves. “We continue to commit to sourcing palm oil that is 100% RSPO Segregated (SG) certified and traceable to plantations and are confident that this verification tool will strengthen our efforts to secure a sustainable palm oil supply chain.”
As part of its commitment to sustainability, Ferrero started the approach in 2013 by partnering with the Earthworm Foundation. This collaboration was a significant step forward in Ferrero's efforts toward sustainable palm oil production. By 2016, the company achieved a major milestone, attaining 100% traceability to palm oil plantations within its supply chain.
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