Mars, PepsiCo, and McCormick Collaborate on Sustainability
Ever since the release of Silent Spring by Rachel Carson, back in 1962, the concept of sustainability has been, at the very least, in the peripheral vision of many leading companies. In the 1970s, the sustainable agenda was pushed forward as industry and government bodies felt increasing pressure from environmental protection non-governmental organisations (NGOs), and , both founded in ‘71, and , which had already been around for 11 years.
In the 1980s and 1990s, the drive for sustainable development progressed even further, sadly as a reaction to catastrophic events, including the and the , with companies being held accountable for their poor decision-making and a call for global responsibility echoing throughout the atmosphere. Fast-forward to the 21st Century, many governments and organisations have finally heeded environmentalists’ call and have adapted a relatively new emphasis on sustainability through a myriad of methods.
To continue the sustainability drive, , a leading global provider of consulting services to both commercial and public markets, announced the creation of the (Supplier LoCT) coalition. The coalition comprises three of the biggest names in food ─ , , and . The initiative is set to help engage suppliers in climate action, and viable solutions in the ongoing battle against unsustainable practices as the world closes in on its point of no return.
Mars, PepsiCo, and McCormick Collaborate
As leading multinational corporations, the coalition has access to a breadth of data insights and actionable solutions that smaller organisations and suppliers lack. By allowing companies across their supply chains to leverage their industry-leading knowledge, resources, and tools, Mars, PepsiCo, and McCormick can start to support their entire ecosystem on its climate journey.
“Emissions reductions are now essential, and global supply chains contain some of the most significant and difficult-to-reduce emissions. While organisations across the world have made bold commitments to science-based climate reductions, most are struggling to deliver progress, and the clock is ticking.”
“We have joined forces with Mars, McCormick, and PepsiCo to demonstrate our combined leadership and go beyond target setting to drive real action.”
Through the coalition, the three organisations will mentor and train their suppliers in emissions reduction strategies and recognise their achievements as and when they come to fruition. By doing so, the trio will accelerate the progress of their own initiatives as they strive to eliminate greenhouse gas (GHG) emissions across their entire value chain.
Meeting the Sustainability Initiatives
The targets align with the overarching goals of the (SBTi) and , a global initiative led by in partnership with , that brings together the world’s most influential businesses in a drive to reach 100% renewable electricity usage, to limit global warming and to be consistent with the established goal of the .
“Suppliers play a critical role in combating climate change and in helping brands reach their climate targets.”
“The Supplier LoCT collaborative is a true team effort across companies and sectors to reduce supply chain emissions. We will enlist more brands and suppliers to join us in our mission, which is aligned with what scientists indicate is required to mitigate the worst impacts from climate change.”
─ Matthew Banks, communication director of Supplier LoCT and associate director in Guidehouse’s ES&I segment.
To help suppliers advance on their sustainability journeys, Guidhouse intends to leverage its 30 plus years of experiences in . Eventually, in the coming years, the firm will also rely heavily on its newly launched sustainability management platform, , to track the progress of participants.
The trio of collaborators will also tap into their own experiences in reducing environmental impacts in several ways:
- Mars, Incorporated is committed to reducing absolute Scope 1, 2 and 3 greenhouse gas (GHG) emissions 27% by 2025 and 67% by 2050 from a 2015 base year;
- McCormick & Company is committed to reducing absolute Scope 1 and 2 GHG emissions 20% by 2025 from a 2015 base year and to reducing absolute Scope 3 GHG emissions 16% by 2030 from a 2017 base year;
- PepsiCo is committed to reducing absolute Scope 1 and 2 GHG emissions by 75% and Scope 3 GHG emissions by 40% by 2030 from a 2015 base year.
The Mars Mindset
“As the world looks to rebuild from the pandemic, this will be a critical year in altering the trajectory of climate change. It’s never been more vital for global businesses, suppliers, and key actors to come together in this time of crisis and protect the health of our planet and global communities for
generations to come,” said Barry Parkin, chief procurement & sustainability officer at Mars, Incorporated. “By forming this collaborative and actively engaging our suppliers on sustainability, we believe we can drive a meaningful, truly global impact.”
“People, planet, and communities have been at the heart of our Purpose Led Performance for many years, supported and championed at the highest levels within McCormick,” said Michael Okoroafor, VP Global Sustainability and Packaging at McCormick and Company. “This collaborative LoCT partnership further demonstrates our commitment to sustainability and doing right for our planet. We are looking forward to engaging our suppliers on this journey to mitigate the climate change impact and benefit the world around us.”
“PepsiCo has learned a great deal on our journey to a science-based, net-zero target,” said Roberta Barbieri, vice president of Sustainability at PepsiCo. “Our suppliers’ climate action is critical to achieving our goal, and it’s collaborative efforts like these that will help ensure what we’ve learned is shared with our entire supplier base.”
Collaboration for the Future
Organisation’s that are equally as committed to the global drive against climate change have applauded the collaborative effort shown by the four companies, with the likes of FMI, the Food Industry Association, and Ceres, a sustainability nonprofit, voicing their appreciation.
"Pre-competitive collaborations like this are a critical component to industry progress toward science-based targets. Every company’s supply chain practices are important in the drive to reduce overall GHG emissions."
─ Marjorie DePuy, senior director, Supply Chain & Sustainability at FMI.
"With leading companies increasingly setting science-based targets, we see growing demand for peer-to-peer learning focused in particular on Scope 3 emissions in corporate supply chains."
"The challenge goes beyond motivating ambition that cascades through supplier tiers; meaningful impact will depend on building suppliers’ capacity to act."
─ Steven Clarke, director of Corporate Clean Energy Leadership at Ceres.
With any luck, this collaborative effort will set an example to any leading organisation that isn’t pulling its weight in the right direction and inspire them to do more; because, at the end of the day, sustainability is the most important agenda today, and if we don’t crack the code, there won’t be a tomorrow.
A Watershed Moment for Sustainability Commitments
Last month saw a landmark ruling where Royal Dutch Shell was instructed to significantly step up its 2030 climate commitments and slash absolute emissions by 45% compared to 2019 levels. This ruling represents a considerable advance on Shell’s stated aim to cut 45% of its emissions intensity compared to 2016 levels by 2035 – a target which provided leeway for increasing emissions as long as the relative carbon emitted per unit of energy produced fell. Now, this imposes a much larger climate obligation on Shell in calling for an urgent absolute reduction.
A ruling that sent ripples through the oil, gas, and energy sector
A watershed moment, this ruling is sure to cause significant alarm amongst fellow oil and gas giants who recognise – for perhaps the first time – that national courts can compel organisations to accelerate their reduction of harmful emissions under the Paris Agreement. Not only does it have "far-reaching" consequences for Shell itself and may even curb the potential growth of the company, but the decision is also likely to set a legal precedent for other energy companies and corporations. According to Thom Wetzer from Oxford University, who heads up the sustainable law programme: “all companies in the energy industry and all heavy emitters will be put on notice and have to accelerate their decarbonisation plans.”
This court mandate applies to not only the Shell group’s own operations but notably also to all the suppliers and customers of the group – strongly implying that Shell is being asked to tackle its Scope 3 emissions. Consequently, it is clear that Shell cannot meet the ruling’s demands alone; to make an impact across all carbon emissions scopes, Shell and other large businesses must immediately look towards forging new, productive partnerships with supplier stakeholders. Failing to do this not only means missed targets and mounting legislative action but also the reputational damage that this will cause to its brand and the company.
Activist investor warns of existential business risk
Reports on the Shell ruling were almost immediately followed by news of a coup attempt in American oil and gas corporation Exxon Mobil. Due to concerns surrounding Exxon’s strategic direction, hedge fund Engine No. 1 ousted sitting board members, stating that the climate crisis poses an "existential threat to the business", which the board has been reluctant to confront.
This small hedge fund accused Exxon of "a failure to take even initial steps towards evolution" and of "obfuscating rather than addressing long-term business risk", partly due to a historical lack of energy industry experience in Exxon’s board. This signalled an imminent shift in the company’s sustainability strategy, which was well received by the market, with Exxon’s shares rising 1.2% the day after the event.
The drive to reduce Scope 3 emissions
And if that wasn’t enough of a shakeup, this was followed by American multinational energy corporation Chevron’s shareholders voting 61% in favour of a proposal to cut Scope 3 emissions at their AGM, signalling frustration with the company’s slack approach towards climate change. Chevron has thus far failed to match its competitors’ net-zero targets with any commitments of its own.
For those less familiar, corporate emissions fall into three categories: Scope 1, 2, and 3. Scope 1 covers emissions from sources that an organisation directly owns or controls. Scope 2 refers to emissions from purchased electricity, steam, heating, and cooling that the reporting company consumes over the course of its operations. And Scope 3 is everything else – all other indirect emissions that occur within an organisation’s value chain, both up and downstream.
Why is this significant? Until now, Scope 3’s heady combination of difficult-to-manage and thus far easy-to-ignore has led large companies to abdicate responsibility for their value chain and sweep its emissions under the carpet. However, the Shell ruling indicates that this approach is no longer viable for big business. With courts stepping in and dictating climate policy to corporations as well as governments, the pressure is mounting on all heavy emitters to tackle their true impact and reduce Scope 3 emissions.
As organisations like Shell, Chevron and Exxon are considered responsible for the actions of their entire ecosystems, sustainability performance becomes contingent on supplier behaviour. The clearest example of this lies in Scope 3 emissions which, for many organisations, considerably exceeds the CO2 they emit directly.
Therefore, the time for green-washing and lip service is now over as pressure mounts from all stakeholder groups for large corporates to take decisive action on sustainability in the supply chain. However, businesses cannot turn promises into concrete progress without actively collaborating with stakeholders across the value chain.
For every five weeks that pass, we lose 1% of the decade
2030, the deadline for achievement of UN SDG-related climate commitments, is fast looming, and with every five weeks that pass, we lose 1% of the decade. The imperative to take immediate action has never been clearer. It’s now down to procurement, wider business leaders, and their associated supplier ecosystems to put sustainability strategy into action by:
● Defining, aligning, and communicating their corporate sustainability goals to focus suppliers, partners and the wider stakeholder groups on how they can make an impact.
● Collaborating systematically through technology using transparent processes that develop trust with suppliers and partners.
● Harnessing the innovation and IP within the supplier ecosystem, turning ideas into projects that can be managed and reported on transparently, and adding clear value trackers to prove impact.
Working closely with stakeholders in the supply chain is an infamously complex process, but it can be made that much simpler using Supplier Collaboration & Innovation (SC&I) technology. This ensures strategic alignment between buyer and supplier and provides comprehensive relationship governance and real-time performance visibility. This allows companies and their suppliers to work on sustainability initiatives more cohesively and develop innovative ideas through collaboration.
Here at Vizibl – through our SC&I platform combined with our knowledge and expertise – we are helping large enterprise organisations in the energy sector better leverage their supplier relationships and move closer to meeting those lofty 2030 sustainability goals.