Unveiled at the recent Institute of Food Technologists show in Chicago, the tool helps put numbers to what can sometimes be hazy concepts, which helps sell sustainability to sometimes skeptical members of management.
“The tool identifies and prioritizes the issues,” Jennifer McLenighan, sustainability marketing manager for Cargill told FoodNavigator-USA. “That’s where you get the financial materiality.”
“It’s important to put in front of a company what a risk might cost the company or what the unique sustainability growth opportunity might be so that you can calculate the return on investment,” she said.
Putting dollar figures to concepts
The term ‘sustainability’ can mean many things. It can mean being a good corporate citizen in labor relations in developing countries. It can mean taking into account the fate of endangered species and habitats when extracting ingredients from certain regions. It can mean cutting energy usage through more efficient operations and better buildings. It can mean cutting waste.
This broad brush makes an unwieldy tool when trying to sell a sustainability initiative to the people who hold the purse strings, McLenighan said. This is why the team at Cargill worked to develop a tool that puts concrete parameters to these sometimes ill defined concepts in an effort to assess benefits and risks and come up with a reasonable view of the return on investment for a company should it choose to tackle some of these issues.
"Customers, consumers and other stakeholders are increasingly demanding more information and communication around what's happening in our extensive supply chains to mitigate corporate or brand risk, find opportunities for cost reduction, or use sustainability as a potential platform for growth," said Scott Portnoy, corporate vice president of Cargill's food ingredients and systems businesses. "However, sustainability investments often struggle to gain traction as many organizations fall short of quantifying a return on investment. Our tool delivers a business case that enables responsible decision making and action."
The online tool, demonstrated on the show floor in Chicago for this reporter via a tablet computer by Cargill’s senior director for corporate responsibility Steve Polski, is essentially a decision tree that is displayed in matrix form. The underlying methodology was developed within Cargill’s responsible supply chain framework, which includes consideration of:
- Labor and working conditions
- Resources efficiency and pollution prevention
- Community health, safety and security
- Biodiveristy conservation and sustainable management of living natural resources
- Indigenous peoples, cultural heritage and involuntary resettlement.
Focused decisionmaking
The tool’s matrix puts commercial impact on one axis, ranked from low to high, and the likelihood of occurrence on the other, ranked from remote to likely. The boxes are filled in by identifying risks, the costs those risks present and the opportunities for growth they might open up. Plugging in all of parameters yields a nine square matrix with highly likely events with high commercial impact in one corner, making clear where the discussion about action items should start, Polski said. He emphasized, though, that the tool goes beyond what might fall under the heading of being a good corporate citizen and can uncover opportunities for product innovation and bottom line growth.
In some supply chains, such a tool may not be necessary, McLenighan said. She identified palm oil and cocoa as two supply chains whose sustainability issues are out in the open and are being debated by many parties.
“Palm oil is different in that there is certification scheme, the Roundtable on Sustainable Palm Oil,” she said. “There are certification schemes in cocoa as well.”
Applying the tool and its focused decision making capability to these supply chains might not yield much new information, McLenighan said. The risks and rewards in these chains are already fairly well known. But that’s not the case in many other chains.
“It can be most helpful where certification schemes aren’t currently available,” she said. “There are other supply chains that are under the radar, that haven’t been examined as closely (as have palm and cocoa) where the tool could help customers uncover some risks and opportunities.”
Marketing advantage
As an example of an opportunity, McLenighan said the tool might uncover a way to produce in an ingredient in a more sustainable way, a flour for example, and then make a label claim on the finished product for that ingredient’s sustainability bona fides to help provide a marketing advantage.
In addition to clarifying issues in less well known supply chains, the tool can uncover new opportunities even within chains with long market histories, such as North American grain supplies, McLenighan said.
“Cargill has deployed the tool on its own operations and has uncovered some interesting findings. Some of the findings we think create a competitive advantage, so we’re not ready to talk about specifics. But it did make us realize that this was an opportunity to help our customers,” McLenighan said.