Examining sustainability and sourcing in the food supply chain

29 May 2018 --- Sustainable ingredients are an essential component of the long-term economic and financial viability of food manufacturers. In today’s consumer-driven climate where people demand detailed information about what’s in their food and where it comes from, this has never been more apparent. The emphasis on sustainability is growing globally with suppliers and manufacturers from different supply chains paying much more attention to the sourcing of their raw materials.

This becomes even more relevant when those raw materials are sourced and imported from poorer countries and from the vulnerable communities that are often the starting point of the supply chain; the people on the ground as it were. 

On top of this, environmental concerns are high on the agenda, and not just for the official campaigners like Friends of the Earth or Greenpeace. The average consumer thinks more about the environmental impact their food (and drink) might be having on the world than ever before. 

This is evidenced by a rise in sustainability and sourcing claims on the label across many food categories. 

Palsgaard
Terms like “sustainability” and “Corporate Social Responsibility” hadn’t been invented when Palsgaard first started out in the early 1900s but the concepts have been embedded in the company’s DNA right from the start.

Jakob Thøisen, CEO at Palsgaard explains to FoodIngredientsFirst how the company has always been way ahead of the curve on CSR. 

“Sustainability has been embedded in our culture since the company was founded back in 1908. In today’s climate, we are seeing customers seek suppliers who are socially responsible, especially as consumers are becoming more aware of where their products come from and how they are made,” he says. 
 
“We have an intensive sourcing program and insist on sustainable raw materials wherever possible. We know that ingredients production is energy-intensive and we work to offset these impacts by optimizing processes, using renewable energy sources and offsetting carbon emissions.”

Thøisen says that Palsgaard remains committed to reaching its goal of carbon-neutrality across all its production sites in 2020. The company is becoming increasingly active, for example, indirectly supporting the UN Sustainable Development Goals (SDGs).

“Most recently, Palsgaard was invited to work with a United Nations Development Program (UNDP) pilot project in Denmark called SDG Accelerator. It is a six-month program looking at innovative sustainable product solutions and business models that address the UN SDGs,” he continues.

“I attended the two-day innovation lab session recently with a team of Palsgaard experts to brainstorm ideas and speak with other companies in Denmark about their ideas.”

Sustainably sourcing raw ingredients: Palm oil
Earlier this year, Unilever took a pioneering stance on its palm oil supply chain by being the first consumer goods company to publish a full dossier of all the suppliers and mills that it sources from.

Unilever believes this demonstrates the company’s commitment to transparency and is a radical step in palm oil supply transparency that could prompt others in the industry to follow suit, leading to widespread change. 

The palm oil supply chain at is often in the spotlight because of concerns about deforestations, human rights and child labor abuses, as well as other environmental impacts like endangering orangutans. 

Agri-food products: Sustainable sourcing at the farm 
Many other big players are also pushing ahead with sustainability strategies whether that concerns a huge commodity like palm oil or other agricultural products.

FoodIngredientsFirst spoke with Jobien Laurijssen, Sustainability Manager at SVZ, during a visit to the Spain-based plant last month, where she examined the company's sustainability strategy, as well as the challenges in achieving 100 percent sustainable sourcing.

“Our sustainability strategy is based on three pillars with the first based on sustainable sourcing in agriculture. Even though we as a company don’t own farms we source directly from them and we feel a responsibility to make sure that products are grown sustainably,” she says. 

“The second pillar is on our operations and the environmental impact of our operations, so we have programs on energy-saving, waste and water reduction. And the third pillar is more oriented towards people and the responsibility we have to our employees but also towards the customer and our end-consumer.”

Watch the full video interview at SVZ here. 

Olam launches AtSource
Olam International is the third largest agribusiness in the world, operating from seed to shelf in 70 countries. It recently took a significant step forward in making agricultural sustainability mainstream with the launch of AtSource. 

This is a sustainable and traceable sourcing solution that provides unique environmental and social insights into the journey of agricultural raw materials and food ingredients from the farm to manufacturing and retail customers. 

AtSource will also enhance Olam’s ability to assess and positively influence the environmental footprint of the 4.7 million farmers in the company’s supply chain. The vast majority are smallholders growing crops such as cocoa, coffee and cashew in emerging markets.

Co-Founder and Group CEO of Olam, Sunny Verghese, says that leading companies in the food sector have been investing significantly in social and environmental programs to source their raw materials more sustainably, but change is not happening fast enough. 

“In the current context, I would say it is impossible to state how much of the world’s food supply can be considered truly sustainable. It is the adage that if we cannot measure it, we cannot improve it,” he notes.

“AtSource will provide our customers with the most comprehensive sustainable supply solution for their raw materials. With AtSource we can now deliver the critical sustainability factors for the long-term resilience of a crop or ingredient from a particular producing country or region.”

“Using this information we can drive meaningful improvements through the supply chain from farm to customer. Capturing this information at a scale and across all our supply chains will be a huge and costly task. But as the company closest to the farmer, we believe AtSource is a key driver in helping us to re-imagine global agriculture, by starting to mainstream sustainability before it is too late.”

Conclusion – What’s next?
Sustainability across the supply chain is expected to move into the mainstream as more farmers, manufacturers, suppliers, transportation and logistics providers and more step up efforts to increase and achieve sustainability goals. 

Efforts will continue to be focused on how we shape a viable food supply chain for the future. 

And the consumers around the world that are driving this expect more complex and sophisticated corporate social responsibility across all sectors of the food chain. Rigid and undynamic businesses that do not respond to this will likely lose out. 

By Gaynor Selby